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Union Power, Replacement and Labour Market Dynamics

Author

Listed:
  • Kai-Uwe Kuuhn

    (University of Michigan and CEPR NERA, CEMFI and CEPR)

  • A. Jorge Padilla

    (University of Michigan and CEPR NERA, CEMFI and CEPR)

Abstract

In this paper, we construct a new basis for insider--outsider theory that acknowledges that insiders are typically easier to organise, so that they can delegate their bargaining decisions to a representative if they want to. We show that harassment or discrimination of new workers by the insider work force is neither individually rational nor needed to explain union formation or inefficient hiring decisions. However, we show that there is a strong tendency for overemployment. Unions tend to increase the efficiency of hiring decisions although union contracts will look like inducing underemployment. Copyright 2002 Royal Economic Society

Suggested Citation

  • Kai-Uwe Kuuhn & A. Jorge Padilla, 2002. "Union Power, Replacement and Labour Market Dynamics," Economic Journal, Royal Economic Society, vol. 112(479), pages 317-343, April.
  • Handle: RePEc:ecj:econjl:v:112:y:2002:i:479:p:317-343
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    References listed on IDEAS

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    1. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters,in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90 National Bureau of Economic Research, Inc.
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    11. Lars A. Stole & Jeffrey Zwiebel, 1996. "Intra-firm Bargaining under Non-binding Contracts," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 375-410.
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