Profit Sharing, Wage Bargaining, And Unemployment
AbstractThis paper examines the effects of profit sharing in an economy with decentralized wage bargaining. Profit sharing makes workers' income more sensitive to wage changes, and this leads to wage moderation. But economywide profit sharing may also improve workers' outside income opportunities, and this strengthens the union's hand in bargaining and tends to raise wages. It turns out that equilibrium unemployment is reduced by profit sharing as long as the elasticity of substitution between labor and capital is less than one, whereas unemployment is increased if the elasticity of substitution is greater than one. Copyright 1990 by Oxford University Press.
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Bibliographic InfoPaper provided by Uppsala - Working Paper Series in its series Papers with number 1988l.
Length: 20 pages
Date of creation: 1988
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collective bargaining ; wages;
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- Erkki Koskela & Rune Stenbacka, 2004. "Equilibrium unemployment under negotiated profit sharing," Labor and Demography 0404009, EconWPA.
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- Koskela, Erkki & König, Jan, 2011. "The Role of Profit Sharing in Dual Labour Markets with Flexible Outsourcing," IZA Discussion Papers 5798, Institute for the Study of Labor (IZA).
- Jan König & Erkki Koskela, 2011. "Does International Outsourcing Really Lower Workers’ Income?," Journal of Labor Research, Springer, vol. 32(1), pages 21-38, March.
- Koskela, Erkki & Stenbacka, Rune, 2004. "Profit Sharing, Credit Market Imperfections and Equilibrium Unemployment," IZA Discussion Papers 1020, Institute for the Study of Labor (IZA).
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