Work sharing, employment and wages
The paper analyzes the effects of a reduction in working time on wages and employment with a monopoly union. In general it is not clear in which directions these variables move, but if employment and working time are perfect substitutes, the effects are related to how working time has been determined initially: the wage increases if initial working time is smaller than or equal to the trade union optimum, whereas the result is unclear when it is larger. In this case it is never optimal for a trade union to reduce both the wage and working time in response to a recessionary supply shock. The analysis may help to explain varying attitudes towards work sharing in different countries.
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References listed on IDEAS
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- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- Layard, Richard, 1982. "Is Incomes Policy the Answer to Unemployment?," Economica, London School of Economics and Political Science, vol. 49(195), pages 219-39, August.
- Sampson, Anthony A, 1983. "Employment Policy in a Model with a Rational Trade Union," Economic Journal, Royal Economic Society, vol. 93(37), pages 297-311, June.
- Pencavel, John, 1985. " Wages and Employment under Trade Unionism: Microeconomic Models and Macroeconomic Applications," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 197-225.
- Oswald, Andrew J, 1979. "Wage Determination in an Economy with Many Trade Unions," Oxford Economic Papers, Oxford University Press, vol. 31(3), pages 369-385, November.
- Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-193.
- Calmfors, Lars, 1982. " Employment Policies, Wage Formation and Trade Union Behavior in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 84(2), pages 345-373.
- Ehrenberg, Ronald G., 1971. "Heterogeneous labor, the internal labor market, and the dynamics of the employment-hours decision," Journal of Economic Theory, Elsevier, vol. 3(1), pages 85-104, March.
- DREZE, Jacques H. & MODIGLIANI, Franco, "undated".
"The trade-off between real wages and employment in an open economy (Belgium),"
CORE Discussion Papers RP
416, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Dreze, Jacques H. & Modigliani, Franco, 1981. "The trade-off between real wages and employment in an open economy (Belgium)," European Economic Review, Elsevier, vol. 15(1), pages 1-40.
- Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September.
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