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Unions, efficiency wages, and unemployment

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  • Wapler, Rüdiger
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    Abstract

    This paper develops a dynamic general equilibrium dual labour market model which incorporates both efficiency wages and union bargaining with monopolistically competitive firms. In one sector, a traditional sector produces a homogeneous good and firms face perfect competition on the product market. In the other sector, monopolistically competitive firms produce a horizontally differentiated good. In this sector, unions represent the interests of the workers and through bilateral bargaining with the employers, try to capture some of the rents which accrue here. Further, firms can increase their profits by paying the workers with the highest productivity an efficiency wage. Therefore, there is not only a wage differential between the two sectors, but also within the unionized sector. It is shown that not only the degree of union bargaining power but also the market power firms possess on the product market leads to an increase in unemployment. -- In einem allgemeinem Gleichgewichtsmodell wird ein unvollkommener dualer Arbeitsmarkt, bei dem in einem Sektor sowohl Effizienzlöhne gezahlt werden als auch Gewerkschaften vertreten sind, die das Lohnniveau für Ihre Mitglieder aushandeln, mit monopolistischer Konkurrenz auf dem Gütermarkt kombiniert. Es zeigt sich, dass nicht nur die Verhandlungsmacht der Gewerkschaften, sondern auch Marktmacht der Unternehmen auf dem Gütermarkt die Arbeitslosigkeit erhöhen. Dies liegt darin begründet, dass zum einen ein höherer Wettbewerbsdruck die Lohnforderungen der Gewerkschaften reduziert und zum anderen die Unternehmen nur einen geringeren Preisaufschlag auf ihre Kosten verlangen können. Beide Effekte führen dazu, dass die Preise für diese Güter sinken, wodurch die Güter- und die Arbeitsnachfrage steigen.

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    Bibliographic Info

    Paper provided by University of Tübingen, School of Business and Economics in its series Tübinger Diskussionsbeiträge with number 210.

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    Date of creation: 2001
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    Handle: RePEc:zbw:tuedps:210

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    Web page: http://www.uni-tuebingen.de/en/faculties/wirtschafts-und-sozialwissenschaftliche-fakultaet/faecher/wirtschaftswissenschaft.html
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    Related research

    Keywords: Arbeitsmarkt; Gewerkschaft; Tarifpartner;

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    References

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    1. Huw David Dixon & Claus Thustrup Hansen & Henrik J. Kleven, . "Dual Labour Markets and Menu Costs: Explaining the Cyclicality of Productivity and Wage Differentials," EPRU Working Paper Series 99-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    2. Haisken-DeNew, John P. & Schmidt, Christoph M., 1999. "Industry Wage Differentials Revisited: A Longitudinal Comparison of Germany and USA (1984-1996)," IZA Discussion Papers 98, Institute for the Study of Labor (IZA).
    3. Nickell, S & Vainiomaki, J & Wadhwani, S, 1994. "Wages and Product Market Power," Economica, London School of Economics and Political Science, vol. 61(244), pages 457-73, November.
    4. Laing, Derek, 1993. "A Signalling Theory of Nominal Wage Inflexibility," Economic Journal, Royal Economic Society, vol. 103(421), pages 1493-1510, November.
    5. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, September.
    6. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
    7. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
    8. Jeremy I. Bulow & Lawrence H. Summers, 1986. "A Theory of Dual Labor Markets with Application to Industrial Policy, Discrimination and Keynesian Unemployment," NBER Working Papers 1666, National Bureau of Economic Research, Inc.
    9. Christian ARNSPERGER & David DE LA CROIX, 1990. "Wage Bargaining with a Price-Making Firm Right-to-Manage and Efficient Bargaining," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1990007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Roberts, Mark A. & Staehr, Karsten & Tranaes, Torben, 2000. "Two-stage bargaining with coverage extension in a dual labour market," European Economic Review, Elsevier, vol. 44(1), pages 181-200, January.
    11. McDonald, Ian M & Solow, Robert M, 1985. "Wages and Employment in a Segmented Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1115-41, November.
    12. Dolado, Juan José & Kramarz, F. & Manning, A. & Machin, S., 1996. "The economic impact of minimum wages in Europe," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/3305, Universidad Carlos III de Madrid.
    13. McCormick, Barry, 1990. "A Theory of Signalling during Job Search, Employment Efficiency, and "Stigmatised" Jobs," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 299-313, April.
    14. Hart, Oliver, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, MIT Press, vol. 97(1), pages 109-38, February.
    15. Amitava Dutt & Anindya Sen, 1997. "Union bargaining power, employment, and output in a model of monopolistic competition with wage bargaining," Journal of Economics, Springer, vol. 65(1), pages 1-17, February.
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