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The Economics of First-Contract Mediation

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Author Info

  • Dobbelaere, Sabien

    ()
    (VU University Amsterdam)

  • Luttens, Roland Iwan

    ()
    (Ghent University)

Abstract

This paper provides an economic foundation for non-binding mediation to stimulate first collective bargaining agreements, as implemented in British Columbia since 1993. We show that the outcome of first-contract mediation is Pareto efficient and proves immune to the insider-outsider problem of underhiring. We also demonstrate that equilibrium wages and profits under mediation coincide with the Owen values of the corresponding cooperative game with the coalitional structure that follows from unionization.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7541.

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Length: 16 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7541

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Related research

Keywords: BC first-contract model; mediation; collective bargaining; union; non-binding contract;

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  1. Catherine C. de Fontenay & Joshua S. Gans, 2003. "Organizational Design and Technology Choice under Intrafirm Bargaining: Comment," American Economic Review, American Economic Association, vol. 93(1), pages 448-455, March.
  2. Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2008. "Wages, Unemployment and Inequality with Heterogeneous Firms and Workers," NBER Working Papers 14122, National Bureau of Economic Research, Inc.
  3. Dale T. Mortensen, 2009. "Wage Dispersion in the Search and Matching Model with Intra-Firm Bargaining," NBER Working Papers 15033, National Bureau of Economic Research, Inc.
  4. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-97, June.
  5. Bauer, Christian & Lingens, Jörg, 2010. "Individual vs. Collective Bargaining in the Large Firm Search Model," Discussion Papers in Economics 11315, University of Munich, Department of Economics.
  6. Westermark, Andreas, 2003. "Bargaining, binding contracts, and competitive wages," Games and Economic Behavior, Elsevier, vol. 43(2), pages 296-311, May.
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