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Are labor unions important for business cycle fluctuations? Lessons from Bulgaria

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  • Vasilev, Aleksandar

Abstract

In this paper we investigate the quantitative importance of collective bargaining agreements for the observed fluctuations in Bulgarian labor markets. Following Maffezzoli (2001), we introduce a monopoly union into a real-business-cycle model with government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2018), and compare and contrast it to a model without unions. We fi nd that the sequential bargaining procedure between the monopoly union and the stand-in rm produces an important internal propagation mechanism within the theoretical setup, which allows the monopoly model to fi t data better than the alternative framework with perfectly-competitive labor markets.

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  • Vasilev, Aleksandar, 2019. "Are labor unions important for business cycle fluctuations? Lessons from Bulgaria," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 10(1), pages 143-161.
  • Handle: RePEc:zbw:espost:203180
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    More about this item

    Keywords

    business cycles; general equilibrium; labor unions; indivisible labor; involuntary unemployment;
    All these keywords.

    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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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