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Wage Bargaining, Union Membership, and the Organization of Unemployment Insurance

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Author Info

  • Holmlund, Bertil

    ()
    (Department of Economics)

  • Lundborg, Per

    (FIEF)

Abstract

The paper offers a theoretical analysis of a labor market institution known as the Gent system, which is a system where unions run unemployment insurance (UI) through government-subsidized UI funds. This sytem is practiced in four Nordic countries with comparatively very high unionization rates. The analysis shows that the Gent system is more conducive to unionization than a compulsory UI system if the Gent system is heavily subsidized by the government or if workers are strongly risk averse. Moreover, a rise in the share of benefits financed by union members is likely to reduce wages as well as union membership.

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Bibliographic Info

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 1996:17.

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Length: 36 pages
Date of creation: 15 Sep 1996
Date of revision:
Publication status: Published in Labour Economics, 1999, pages 397-415.
Handle: RePEc:hhs:uunewp:1996_017

Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Email:
Web page: http://www.nek.uu.se/
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Related research

Keywords: wage bargaining; union membership; unemployment insurance;

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References

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  1. Calmfors, L. & Forslund, A., 1989. "Wage Setting In Sweden," Papers 430, Stockholm - International Economic Studies.
  2. Holmlund, Bertil & Lundborg, Per, 1988. " Unemployment Insurance and Union Wage Setting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(2), pages 161-72.
  3. Naylor, Robin & Cripps, Martin, 1993. "An economic theory of the open shop trade union," European Economic Review, Elsevier, vol. 37(8), pages 1599-1620, December.
  4. Booth, Alison L & Chatterji, Monojit, 1994. "Union Membership and Wage Bargaining When Membership is Not Compulsory," CEPR Discussion Papers 884, C.E.P.R. Discussion Papers.
  5. Kiander, Jaakko, 1993. "Endogenous unemployment insurance in a monopoly union model when job search matters," Journal of Public Economics, Elsevier, vol. 52(1), pages 101-115, August.
  6. Carruth, Alan A & Oswald, Andrew J, 1985. "Miners' Wages in Post-war Britain: An Application of a Model of Trade Union Behaviour," Economic Journal, Royal Economic Society, vol. 95(380), pages 1003-20, December.
  7. Neumann, George & Pedersen, Peder J. & Westergard-Nielsen, Niels, 1991. "Long-run international trends in aggregate unionization," European Journal of Political Economy, Elsevier, vol. 7(3), pages 249-274, October.
  8. Farber, Henry S, 1978. "Individual Preferences and Union Wage Determination: The Case of the United Mine Workers," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 923-42, October.
  9. Booth, Alison L & Chatterji, Monojit, 1993. "Reputation, Membership and Wages in Open Shop Trade Union," Oxford Economic Papers, Oxford University Press, vol. 45(1), pages 23-41, January.
  10. Holmlund, Bertil & Lundborg, Per, 1989. "Unemployment insurance schemes for reducing the natural rate of unemployment," Journal of Public Economics, Elsevier, vol. 38(1), pages 1-15, February.
  11. Jakobsson, Ulf, 1976. "On the measurement of the degree of progression," Journal of Public Economics, Elsevier, vol. 5(1-2), pages 161-168.
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Citations

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Cited by:
  1. Alho, Kari O. E., 2006. "Labour Market Institutions and the Effectiveness of Tax and Benefit Policies in Enchancing Employment: A General Equilibrium Analysis," Discussion Papers 1008, The Research Institute of the Finnish Economy.
  2. Laszlo Goerke & Markus Pannenberg, 2007. "Trade Union Membership and Works Councils in West Germany," Industrielle Beziehungen - Zeitschrift fuer Arbeit, Organisation und Management - The German Journal of Industrial Relations, Rainer Hampp Verlag, vol. 14(2), pages 154 - 175.
  3. Pekka Sinko, 2003. "Subsidizing vs. Experience Rating of Unemployment Insurance in Unionized Labor Markets," Discussion Papers 319, Government Institute for Economic Research Finland (VATT).
  4. Schnabel, Claus, 2012. "Union membership and density: Some (not so) stylized facts and challenges," Discussion Papers 81, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  5. Helge Sanner, 2001. "Bargaining Structure and Regional Unemployment Insurance," Volkswirtschaftliche Diskussionsbeiträge 44, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät, revised May 2002.
  6. Laszlo Goerke & Markus Pannenberg, 2004. "Norm-Based Trade Union Membership: Evidence for Germany," German Economic Review, Verein für Socialpolitik, vol. 5(4), pages 481-504, November.
  7. Daniele Checchi, 2000. "Time series evidence on union densities in European countries," Departmental Working Papers 2000-10, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  8. Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-related unemployment benefits and unemployment," Economic Systems, Elsevier, vol. 27(1), pages 41-62, March.
  9. Dittrich, Marcus, 2006. "Welfare Effects of Union Bargaining Centralisation in a Two-Sector Economy," MPRA Paper 11, University Library of Munich, Germany, revised Sep 2006.
  10. Lai, Ching-chong & Chang, Juin-jen & Chang, Wen-ya, 2001. "Currency devaluation in an open-shop union," International Review of Economics & Finance, Elsevier, vol. 10(1), pages 61-74.
  11. Marja-Liisa Halko, 2004. "Buffer funding of unemployment insurance in a dynamic labour union model," Macroeconomics 0404030, EconWPA.
  12. Daniele Checchi & Claudio Lucifora, 2002. "Unions and labour market institutions in Europe," Economic Policy, CEPR & CES & MSH, vol. 17(35), pages 361-408, October.
  13. Erling Barth & Karl O. Moene, 2009. "The Equality Multiplier," NBER Working Papers 15076, National Bureau of Economic Research, Inc.
  14. Halko, Marja-Liisa, 2003. "Buffer funding of unemployment insurance in a dynamic labour union model," Research Discussion Papers 24/2003, Bank of Finland.
  15. Goerke, Laszlo, 1998. "Bismarck versus Beveridge: Flat- and earnings-related unemployment insurance in an efficiency wage framework," Discussion Papers, Series 1 291, University of Konstanz, Department of Economics.
  16. Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-Related Unemployment Benefits in a Unionised Economy," IZA Discussion Papers 701, Institute for the Study of Labor (IZA).
  17. Petri Böckerman & Roope Uusitalo, 2005. "Union membership and the erosion of the Ghent system: Lessons from Finland," Labor and Demography 0508008, EconWPA.
  18. Schnabel, Claus, 2002. "Determinants of trade union membership," Discussion Papers 15, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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