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Timing is Everything - The Labour Market Effects of Union Wage Bargaining

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  • Joerg Lingens

    (University of Regensburg)

Abstract

This paper analyses the labour market effects of union wage bargaining for different sequences of the employment choice and the wage bargain. The result that collective bargaining decreases (firm-level) employment in a right-to-manage setting hinges on the assumption that employment is chosen by the firm after the wage bargain ("ex-ante" bargaining). Turning this sequence upside down ("ex-post" bargaining), the firm uses employment choice as a strategic variable for the wage bargain. Employment will be equal to the competitive case and wages will be higher. Although we strictly assume right-to-manage, the timing of the bargain ensures an efficient contract.

Suggested Citation

  • Joerg Lingens, 2007. "Timing is Everything - The Labour Market Effects of Union Wage Bargaining," Economics Bulletin, AccessEcon, vol. 10(5), pages 1-11.
    • Handle: RePEc:ebl:ecbull:eb-07j50001
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    File URL: http://www.accessecon.com/pubs/EB/2007/Volume10/EB-07J50001A.pdf
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    References listed on IDEAS

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    3. Grout, Paul A, 1984. "Investment and Wages in the Absence of Binding Contracts: A Nash Bargining Approach," Econometrica, Econometric Society, vol. 52(2), pages 449-460, March.
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    6. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
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    Cited by:

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    3. Rupayan Pal & Bibhas Saha, 2008. "Union-oligopoly bargaining and entry deterrence: a reassessment of limit pricing," Journal of Economics, Springer, vol. 95(2), pages 121-147, November.

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    More about this item

    Keywords

    right-to-manage;

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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