Union Wage Policy: The Importance of Labour Mobility and the Degree of Centralization
With endogenous product prices, nationwide wage-setting gives lower unemployment than decentralized wage-setting. However, intermediate-level wage-setting may give more unemployment than both completely decentralized and completely centralized wage-setting. The main part of the paper considers a dynamic model, which includes flows of workers between firms and in and out of unemployment. With less than full centralization, the wages chosen by unions are lower the higher is the degree of labor mobility. Wages are also lower the higher is the degree of centralization, unless labor mobility is very high. Copyright 1991 by The London School of Economics and Political Science.
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Volume (Year): 58 (1991)
Issue (Month): 230 (May)
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