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Wage Bargaining and Monopsony

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  • Torberg Falch

    ()
    (Department of Economics, Norwegian University of Science and Technology)

  • Bjarne Strøm

    ()
    (Department of Economics, Norwegian University of Science and Technology)

Abstract

This paper identifies three possible outcomes of higher relative firm bargaining power in a unionized firm facing an upward sloping labor supply curve. The conventional regime with reduced wage and higher employment corresponds to firm bargaining power below a certain critical value. A supply constrained regime where increased firm bargaining power reduces both wages and employment occurs when the bargaining power is above another critical level. A novel result is that we identify a third regime, with firm bargaining power between these critical levels, where changes in relative bargaining power does not affect wages and employment.

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Bibliographic Info

Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 4304.

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Length: 24 pages
Date of creation: 01 Sep 2004
Date of revision:
Handle: RePEc:nst:samfok:4304

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Web page: http://www.svt.ntnu.no/iso/WP/wp.htm
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Keywords: Monopsony; Unions; Wage bargaining;

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References

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  14. Falch, Torberg, 2001. "Collective bargaining in the public sector and the role of budget determination," European Journal of Political Economy, Elsevier, vol. 17(1), pages 75-99, March.
  15. Bulkley, George & Myles, Gareth D., 2001. "Individually rational union membership," European Journal of Political Economy, Elsevier, vol. 17(1), pages 117-137, March.
  16. Alogoskoufis, George & Manning, Alan, 1991. "Tests of alternative wage employment bargaining models with an application to the UK aggregate labour market," European Economic Review, Elsevier, vol. 35(1), pages 23-37, January.
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  20. Falch, Torberg & Strom, Bjarne, 2007. "Wage bargaining and monopsony," Economics Letters, Elsevier, vol. 94(2), pages 202-207, February.
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Cited by:
  1. Falch, Torberg & Strom, Bjarne, 2007. "Wage bargaining and monopsony," Economics Letters, Elsevier, vol. 94(2), pages 202-207, February.

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