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Centralised Labour Market Negotiations: Strategic Behaviour Curbs Employment

Author

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  • Julia Müller
  • Thorsten Upmann

Abstract

This paper contributes to the analysis of centralised versus decentralised labour market negotiations. Applying the familiar Nash bargaining solution, we show that centralised negotiations lead to a lower employment level but to a higher wage rate than decentralised labour market bargaining. While this is an important theoretical result on its own, it has important effects for both empirical labour market research and labour market policies. Also, this result counters the critique that efficient negotiations result in employment levels exceeding the competitive level.

Suggested Citation

  • Julia Müller & Thorsten Upmann, 2018. "Centralised Labour Market Negotiations: Strategic Behaviour Curbs Employment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 174(2), pages 278-302, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201806)174:2_278:clmnsb_2.0.tx_2-y
    DOI: 10.1628/093245617X14930170168706
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    Citations

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    Cited by:

    1. Claus-Jochen Haake & Thorsten Upmann & Papatya Duman, 2020. "Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining," CESifo Working Paper Series 8422, CESifo.
    2. Claus-Jochen Haake & Thorsten Upmann & Papatya Duman, 2019. "The Decomposability of the Nash Bargaining Solution in Labor Markets," Working Papers CIE 128, Paderborn University, CIE Center for International Economics.
    3. V.I. Rodionova & L.A. Shvachkina & V.A. Ivashova, 2018. "Social Correlation of Professional Educational Services and Labor Market as a Vector of Successful Social and Economic Development," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 285-293.
    4. Claus‐Jochen Haake & Thorsten Upmann & Papatya Duman, 2023. "Wage bargaining and employment revisited: separability and efficiency in collective bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 403-440, April.

    More about this item

    Keywords

    centralised and decentralised labour market negotiations; efficient bargains; Nash bargaining solution; wage and employment effects; endogenous output price;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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