Undominated Wage Rates in a Unionized Overlapping Generations Economy
AbstractAn overlapping generations, macro model where consumers are divided into workers and capitalists is analysed. In each period the wage rate is negotiated between an employers' union and a trade union. Other prices adjust competitively. The solution concept used is cooperative, the wage rate chosen by unions should be undominated, i.e. there must not exist another wage rate leading to higher utilities for both workers and capitalists. The resulting one period equilibria, relative Pareto optima, RPO, and also stationary equilibria, stationary relative Pareto optima, SRPO are analysed. Results are that full employment (S)RPO always exist and in some economies unemployment (S)RPO also exist. Sufficient conditions for the latter to be the case are stated and the existence of economies fulfilling these conditions is demonstrated.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 90-12.
Length: 17 pages
Date of creation: May 1990
Date of revision:
Publication status: Published in: European Economic Review, 1991, 35(6) pp. 1255-1275
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theory of aggregate supply; collective bargaining in the private sector; trade unions;
Other versions of this item:
- Jacobsen, Hans Jorgen & Schultz, Christian, 1991. "Undominated wage rates in a unionized overlapping generations economy," European Economic Review, Elsevier, Elsevier, vol. 35(6), pages 1255-1275, August.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
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