Optimal Intervention in an Economy with Trade Unions
AbstractThe paper studies the theory of optimal intervention in an economy with trade unions. It is shown that the traditional remedy, a flat employment subsidy in the union sector, cannot produce a first-best welfare optimum. But non-linear wage and employment subsidies can generate a full social optimum, and the paper examines their optimal structure. One appealing form turns out to be a wage subsidy schedule which is an increasing and concave function on union employment. Employment subsidy schedules and statutory wages policy are also discussed.
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Bibliographic InfoPaper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 221.
Length: 39 pages
Date of creation: 1982
Date of revision:
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- Rupayan Pal, 2011. "Union-Firm Bargaining Under Alternative Pay Schemes: Does Performance Related Pay Fair Better?," Working Papers id:3803, eSocialSciences.
- Kouretas, Georgios P. & Yannopoulos, Andreas, 2006. "Dynamic modelling of trade union behaviour: Evidence from the Greek manufacturing sector," Economic Modelling, Elsevier, Elsevier, vol. 23(2), pages 316-338, March.
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