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Wages, Fringe Benefits and Efficiency in Union-Firm Bargaining

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  • Elie Appelbaum

    (York University, Canada)

Abstract

This paper provides an efficient union-firm bargaining solution within the right to manage framework, by separating efficiency and distribution considerations through bargaining over wage and fringe benefits. We show that without insurance considerations, efficiency is achieved by equating the wage and workers’ opportunity cost and providing the union with a surplus share in accordance with its bargaining power. We also show that with insurance considerations, the optimal contract, again, equates the wage and workers’ opportunity cost, but it also provides full insurance. There is empirical evidence that fringe benefits are, indeed, common and play an important role in union contracts.

Suggested Citation

  • Elie Appelbaum, 2008. "Wages, Fringe Benefits and Efficiency in Union-Firm Bargaining," Working Papers 2008_04, York University, Department of Economics.
    • Handle: RePEc:yca:wpaper:2008_04
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    File URL: http://dept.econ.yorku.ca/research/workingPapers/working_papers/2008/labour-bar.pdf
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    References listed on IDEAS

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    Cited by:

    1. Elie Appelbaum, 2009. "Alternating Offers Union-Firm Bargaining: Order of Play and Efficiency," Working Papers 2009_02, York University, Department of Economics.

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    More about this item

    Keywords

    Price Union Contracts; Efficient Bargaining; Right to Manage;
    All these keywords.

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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