Is Unemployment Lower If Unions Bargain Over Employment?
AbstractThe authors consider an economy in which all firms are unionized and bargain with their own union. If unions bargain over employment as well as wages, employment will be the same as if they bargain over wages only, provided that the production function is Cobb-Douglas. (Employment will be higher if the elasticity of substitution between labor and capital is smaller than unity.) If the authors start from a fully competitive labor market and then move to one of efficient bargaining (over wages and employment), employment falls. This is so even if the marginal utility of income is constant, so that bargaining is "strongly efficient." Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Bibliographic InfoPaper provided by London School of Economics - Centre for Labour Economics in its series Papers with number 308.
Length: 30 pages
Date of creation: 1988
Date of revision:
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Postal: LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE, CENTER FOR LABOUR ECONOMICS, HOUGHTON STREET LONDON WC2A 2AE ENGLAND.
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/
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unemployment ; wages ; trade unions ; competition;
Other versions of this item:
- Layard, Richard & Nickell, Stephen, 1990. "Is Unemployment Lower if Unions Bargain over Employment?," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 773-87, August.
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