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Imperfect goods and labor markets, and the union wage gap

  • Helge Sanner


Existing theoretical literature fails to explain the differences between the pay of workers that are covered by union agreements and others who are not. This study aims at closing this gap by a single general- equilibrium approach that integrates a dual labor market and a two- sector product market. Our results suggest that the so­ called 'union wage gap' is largely determined by the degree of centralization of the bargains, and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.

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Article provided by Springer & European Society for Population Economics in its journal Journal of Population Economics.

Volume (Year): 19 (2006)
Issue (Month): 1 (February)
Pages: 119-136

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Handle: RePEc:spr:jopoec:v:19:y:2006:i:1:p:119-136
DOI: 10.1007/s00148-005-0010-6
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  17. Soskice, David, 1990. "Wage Determination: The Changing Role of Institutions in Advanced Industrialized Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 6(4), pages 36-61, Winter.
  18. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
  19. Bernt Bratsberg & James F. Ragan Jr., 2002. "Changes in the Union Wage Premium by Industry," ILR Review, Cornell University, ILR School, vol. 56(1), pages 65-83, October.
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