IDEAS home Printed from https://ideas.repec.org/a/kap/atlecj/v30y2002i1p61-73.html

Nominal versus real wage rigidity in a monopoly union: A synthesis

Author

Listed:
  • Ching-Chong Lai
  • Juin-Jen Chang

Abstract

Based upon a monopoly union model, this paper addresses how the degree of money illusion of the union member and the indexation rule of unemployment benefits are interdependent in governing the possibility of either nominal or real wage rigidity. Two main findings emerge from the analysis. First, nominal wage rigidity is present unless union members are characterized by complete money illusion and the government does not adjust its nominal unemployment payments. Second, real wage rigidity holds if union members are free of money illusion and nominal unemployment benefits are fully indexed to either union-set wages or the product price. Copyright International Atlantic Economic Society 2002

Suggested Citation

  • Ching-Chong Lai & Juin-Jen Chang, 2002. "Nominal versus real wage rigidity in a monopoly union: A synthesis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 61-73, March.
    • Handle: RePEc:kap:atlecj:v:30:y:2002:i:1:p:61-73
    DOI: 10.1007/BF02299147
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF02299147
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF02299147?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. Shah, Anup, 1985. "A macro model with trade unions," Journal of Macroeconomics, Elsevier, vol. 7(2), pages 175-194.
    3. Branson, William H & Klevorick, Alvin K, 1969. "Money Illusion and the Aggregate Consumption Function," American Economic Review, American Economic Association, vol. 59(5), pages 832-849, December.
    4. Benassy, Jean-Pascal, 1995. "Nominal Rigidities in Wage Setting by Rational Trade Unions," Economic Journal, Royal Economic Society, vol. 105(430), pages 635-643, May.
    5. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    6. repec:bla:scandj:v:87:y:1985:i:2:p:234-61 is not listed on IDEAS
    7. Booth,Alison L., 1994. "The Economics of the Trade Union," Cambridge Books, Cambridge University Press, number 9780521468398, January.
    8. repec:bla:scandj:v:87:y:1985:i:2:p:197-225 is not listed on IDEAS
    9. Edwaed J. Kane & Alvin K. Klevorick, 1967. "Absence Of Money Illusion: A Sine Qua Non For Neutral Money?," Journal of Finance, American Finance Association, vol. 22(3), pages 419-423, September.
    10. JOHN CREEDY & IAN M. McDONALD, 1991. "Models of Trade Union Behaviour: A Synthesis," The Economic Record, The Economic Society of Australia, vol. 67(4), pages 346-359, December.
    11. Dennis J. Snower, 1996. "Unemployment Benefits: An Assessment of Proposals for Reform," Archive Discussion Papers 9601, Birkbeck, Department of Economics, Mathematics & Statistics.
    12. repec:bla:ecorec:v:67:y:1991:i:199:p:346-59 is not listed on IDEAS
    13. Craig, George D, 1974. "Money Illusion and the Aggregate Consumption Function: Note," American Economic Review, American Economic Association, vol. 64(1), pages 195-199, March.
    14. Sampson, Anthony A, 1986. "The Shift to Indirect Taxation in a Unionized Economy," Bulletin of Economic Research, Wiley Blackwell, vol. 38(1), pages 87-91, January.
    15. Yip, Chong K., 1988. "The employment effects of tariffs in an efficient bargain model," Journal of Macroeconomics, Elsevier, vol. 10(3), pages 477-485.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-Related Unemployment Benefits in a Unionised Economy," IZA Discussion Papers 701, Institute of Labor Economics (IZA).
    2. Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-related unemployment benefits and unemployment," Economic Systems, Elsevier, vol. 27(1), pages 41-62, March.
    3. repec:lic:licosd:13603 is not listed on IDEAS
    4. Fanti, Luciano & Gori, Luca, 2013. "Efficient bargaining versus right to manage: A stability analysis in a Cournot duopoly with trade unions," Economic Modelling, Elsevier, vol. 30(C), pages 205-211.
    5. Luca Gori & Luciano Fanti, 2009. "Right-to-manage unions endogenous growth and welfare," Economics Bulletin, AccessEcon, vol. 29(2), pages 903-917.
    6. Frank Scharr, 2005. "Tarifbindung, Rententeilung und Konzessionsverträge als Einflussgrößen der Lohnhöhe in Unternehmen : eine Untersuchung mit Mikrodaten für thüringische Firmen," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 39, February.
    7. Ching‐Chong Lai & Juin‐Jen Chang & Wen‐Ya Chang, 1996. "Efficient Bargains and Currency Devaluation," The Economic Record, The Economic Society of Australia, vol. 72(219), pages 313-318, December.
    8. Fanti, Luciano & Gori, Luca, 2011. "Efficient bargaining versus right to manage: a stability analysis with heterogeneous players in a duopoly with quantity competition and trade unions," MPRA Paper 34434, University Library of Munich, Germany.
    9. Lai, Ching-chong & Chang, Juin-jen & Chang, Wen-ya, 2001. "Currency devaluation in an open-shop union," International Review of Economics & Finance, Elsevier, vol. 10(1), pages 61-74.
    10. Chang, Juin-Jen & Lai, Ching-Chong & Chang, Wen-Ya, 1999. "The Mundell proposition with efficient wage-employment bargaining," Journal of Macroeconomics, Elsevier, vol. 21(4), pages 765-784.
    11. Kee, Hiau Looi & Hoon, Hian Teck, 2005. "Trade, capital accumulation and structural unemployment: an empirical study of the Singapore economy," Journal of Development Economics, Elsevier, vol. 77(1), pages 125-152, June.
    12. Peter J. Luke & Mark E. Schaffer, 1999. "Wage Determination in Russia: An Econometric Investigation," CERT Discussion Papers 9908, Centre for Economic Reform and Transformation, Heriot Watt University.
    13. Picard, Pierre M. & Toulemonde, Eric, 2006. "Firms agglomeration and unions," European Economic Review, Elsevier, vol. 50(3), pages 669-694, April.
    14. Giuseppe Bognetti & Michele Santoni, 2010. "Can domestic unions gain from offshoring?," Journal of Economics, Springer, vol. 100(1), pages 51-67, May.
    15. Marjan Petreski & Nikica Mojsoska-Blazevski, 2013. "Real Wages in the Manufacturing Industry in Macedonia: The Role of Macroeconomic Factors, with Reference to Recession Times," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 26(4), pages 113-126, January.
    16. Loïc Cadiou & Stéphanie Guichard & Mathilde Maurel, 2000. "Disparités institutionnelles et flexibilité des marchés du travail dans l'UE," Économie et Statistique, Programme National Persée, vol. 332(1), pages 49-63.
    17. Robert Plasman & François Rycx & Ilan Tojerow, 2006. "Industry wage differentials, unobserved ability, and rent-sharing: evidence from matched employer-employee, 1992-2005," DULBEA Working Papers 06-14.RS, ULB -- Universite Libre de Bruxelles.
    18. Justus Haucap & Christian Wey, 2004. "Unionisation structures and innovation incentives," Economic Journal, Royal Economic Society, vol. 114(494), pages 149-165, March.
    19. 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.
    20. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 11, pages 973-1041, Elsevier.
    21. Mohamed Jellal & François-Charles Wolff, 2003. "Privatisation et négociation collective," Revue d’économie du développement, De Boeck Université, vol. 11(1), pages 73-99.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:30:y:2002:i:1:p:61-73. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.