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Inventory Accumulation, Wages, and Employment

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  • Clark, Simon

Abstract

This paper analyzes the effect of inventory accumulation on the outcome of wage and employment agreements between a union and a firm. A two-period model is set up, with bargaining in each period, and the paper analyzes under what circumstances inventories will be held even if demand and production conditions are constant. It is found that inventories have an important strategic role. They bring forward employment and strengthen the bargaining position of the firm in the later period. However, the firm's strategic use of inventories will generally be to the detriment of both parties. Copyright 1991 by Royal Economic Society.

Suggested Citation

  • Clark, Simon, 1991. "Inventory Accumulation, Wages, and Employment," Economic Journal, Royal Economic Society, vol. 101(405), pages 230-238, March.
  • Handle: RePEc:ecj:econjl:v:101:y:1991:i:405:p:230-38
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    Cited by:

    1. Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, January.
    2. Smith, Jennifer C, 1996. "Wage Interactions: Comparisons or Fall-Back Options?," Economic Journal, Royal Economic Society, vol. 106(435), pages 495-506, March.
    3. Ellen Brock & Sabien Dobbelaere, 2006. "Has International Trade Affected Workers’ Bargaining Power?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(2), pages 233-266, July.
    4. Ordine, Patrizia, 1995. "Wage drift and minimum contractual wage: Theoretical interrelationship and empirical evidence for Italy," Labour Economics, Elsevier, vol. 2(4), pages 335-357, December.
    5. Jennifer C. Smith, 1996. "Effet du pouvoir de négociation et du marché local du travail sur la détermination des salaires," Économie et Prévision, Programme National Persée, vol. 126(5), pages 1-17.
    6. Coles, Melvyn & Smith, Eric, 1998. "Strategic bargaining with firm inventories," Journal of Economic Dynamics and Control, Elsevier, vol. 23(1), pages 35-54, September.

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