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Union Objectives, Wage Setting Externalities and Structural Constraints


  • Jonathan G. James

    (School of Business and Economics, Swansea University, Swansea, United Kingdom)

  • Philip Lawler

    (School of Business and Economics, Swansea University, Swansea, United Kingdom)


A prominent strand of literature featuring large monopoly unions and monopolistically competitive goods markets has concluded that design of the monetary regime can influence equilibrium unemployment as well as inflation. In this paper, it is shown that this non-neutrality result crucially hinges on the assumption that, prior to entering wage negotiations, unions do not formulate real wage and employment objectives that are jointly feasible, in the sense that they are consistent with the set of possible labour-market outcomes implied by the underlying economic structure.

Suggested Citation

  • Jonathan G. James & Philip Lawler, 2010. "Union Objectives, Wage Setting Externalities and Structural Constraints," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 13(1), pages 16-35, Summer.
  • Handle: RePEc:ekn:ekonom:v:13:y:2010:i:1:p:16-35

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects


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