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Towards a Hierarchical Approach to Trade Union Behaviour

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  • Drakopoulos, Stavros A.

Abstract

The main starting point of this paper is the idea that trade unions do not only care about real wage level but also about a reference or aspiration wage level. After citing a number of empirical works, the paper argues that the attainment of the reference wage is a priority for the union. This implies that there is a hierarchical character in union objectives. A two-step union utility function is suggested in order to capture the change in priority once the prime objective (the reference wage level) was reached. The analysis is conducted in an efficient bargain framework, and shows that employment-wage combinations come into the picture only when the reference wage is reached. In a unionized economy, this implies that substantial increases in employment will take place only after the union reference wage has been met.

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File URL: http://mpra.ub.uni-muenchen.de/15597/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15597.

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Date of creation: Mar 1995
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Publication status: Published in Economic Notes No 1.25(1996): pp. 47-56
Handle: RePEc:pra:mprapa:15597

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Related research

Keywords: Wages; Trade Unions; Trade Union Objectives;

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References

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  1. Holmlund, B. & Skedinger, P., 1988. "Wage Bargaining And Wage Drift: Evidence From The Swedish Wood Industry," Papers 419, Stockholm - International Economic Studies.
  2. Robert A. Hart & Thomas Moutos, 1990. "Efficient Bargains in the Context of Recent Labour Market Experience and Policy," Upjohn Working Papers and Journal Articles 90-03, W.E. Upjohn Institute for Employment Research.
  3. Jones, Stephen R. G. & McKenna, C. J., 1989. "The effect of outsiders on union contracts," European Economic Review, Elsevier, vol. 33(8), pages 1567-1573, October.
  4. Jacoby, Sanford M & Mitchell, Daniel J B, 1990. "Sticky Stories: Economic Explanations of Employment and Wage Rigidity," American Economic Review, American Economic Association, vol. 80(2), pages 33-37, May.
  5. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
  6. Drakopoulos, S A, 1994. " Hierarchical Choice in Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 8(2), pages 133-53, June.
  7. Gylfason, Thorvaldur & Lindbeck, Assar, 1984. "Competing wage claims, cost inflation, and capacity utilization," European Economic Review, Elsevier, vol. 24(1), pages 1-21.
  8. Robert J. Flanagan, 1976. "Wage Interdependence in Unionized Labor Markets," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(3), pages 635-682.
  9. Stavros A. Drakopoulos & John D.F. Skåtun, 1997. "Altruism, union utility and outsiders," Journal of Economic Studies, Emerald Group Publishing, vol. 24(6), pages 392-401, October.
  10. Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-45, June.
  11. Robert H. Frank, 1984. "Interdependent Preferences and the Competitive Wage Structure," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 510-520, Winter.
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