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The Economics of First-Contract Mediation

Author

Listed:
  • Sabien Dobbelaere

    (VU University Amsterdam, the Netherlands, and IZA, Germany)

  • Roland Iwan Luttens

    (VU University Amsterdam, and Amsterdam University College, the Netherlands)

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.

Suggested Citation

  • Sabien Dobbelaere & Roland Iwan Luttens, 2013. "The Economics of First-Contract Mediation," Tinbergen Institute Discussion Papers 13-096/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20130096
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    References listed on IDEAS

    as
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    4. Nickell, S J & Andrews, M, 1983. "Unions, Real Wages and Employment in Britain 1951-79," Oxford Economic Papers, Oxford University Press, vol. 35(0), pages 183-206, Supplemen.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    BC first-contract model; mediation; collective bargaining; union; non-binding contract;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law

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