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Testing Between Alternative Wage-Employment Bargaining Models Using Belgian Aggreggate Data

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  • Vannetelbosch, Vincent J.

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

In this paper, I discriminate among alternative models of bargaining for wages and employment (right-to-manage, efficient bargaining and general bargaining models) using Belgian aggregate data. I estimate the ECM representation of a dynamic employment equation for each model using Engle-Granger’s two-step estimation procedure. I use Phillips-Hansen’s FME to obtain long-run parameters’ estimators which are optimal and asymptotically normally distributed. On the basis of non-nested tests, both the right-to-manage and the hypothesis that wage-employment negotiations are efficient are ejected in favour of the general bargaining model where outcomes are inefficient.

Suggested Citation

  • Vannetelbosch, Vincent J., 1993. "Testing Between Alternative Wage-Employment Bargaining Models Using Belgian Aggreggate Data," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1994012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 27 Apr 1994.
  • Handle: RePEc:ctl:louvir:1994012
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, pages 97-109.
    2. Roth, Alvin E, 1985. "A Note on Risk Aversion in a Perfect Equilibrium Model of Bargaining," Econometrica, Econometric Society, pages 207-211.
    3. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
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    5. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
    6. Urbain, Jean-Pierre, 1992. "On Weak Exogeneity in Error Correction Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(2), pages 187-207, May.
    7. Bogaert, H. & de Biolley, T. & Verlinden, J., 1991. "L'ajustement des salaires face aux chocs pétroliers et les réponses de la politique économique," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1991008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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    9. Hansen, Bruce E., 1992. "Efficient estimation and testing of cointegrating vectors in the presence of deterministic trends," Journal of Econometrics, Elsevier, pages 87-121.
    10. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    11. Alogoskoufis, George & Manning, Alan, 1991. "Tests of alternative wage employment bargaining models with an application to the UK aggregate labour market," European Economic Review, Elsevier, pages 23-37.
    12. Dalmazzo, Alberto, 1992. "Outside options in a bargaining model with decay in the size of the cake," Economics Letters, Elsevier, pages 417-421.
    13. Stephen Nickell & Sushil Wadhwani, 1991. "Employment Determination in British Industry: Investigations Using Micro-Data," Review of Economic Studies, Oxford University Press, pages 955-969.
    14. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-139, March.
    15. Phillips, Peter C B & Ouliaris, S, 1990. "Asymptotic Properties of Residual Based Tests for Cointegration," Econometrica, Econometric Society, pages 165-193.
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    Citations

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    Cited by:

    1. Ana Mauleon & Vincent Vannetelbosch, 1999. "Profit sharing and strike activity in Cournot oligopoly," Journal of Economics, Springer, pages 19-40.
    2. Mauleon, Ana & Vannetelbosch, Vincent J., 2003. "Market competition and strike activity," International Journal of Industrial Organization, Elsevier, pages 737-758.
    3. Farvaque, Etienne & Matsueda, Norimichi & Méon, Pierre-Guillaume, 2009. "How monetary policy committees impact the volatility of policy rates," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 534-546, December.
    4. Runar Brännlund & Jonas Nordström & Jesper Stage & Dick Svedin, 2016. "Foreign ownership and its effects on employment and wages: the case of Sweden," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), pages 1-17.
    5. Ana Mauleon & Vincent Vannetelbosch, 1999. "Profit sharing and strike activity in Cournot oligopoly," Journal of Economics, Springer, pages 19-40.
    6. Navon, Guy & Tojerow, Ilan, 2006. "The Effects of Rent-Sharing on the Gender Wage Gap in the Israeli Manufacturing Sector," IZA Discussion Papers 2361, Institute for the Study of Labor (IZA).
    7. Vannetelbosch, Vincent J., 1997. "Wage bargaining with incomplete information in an unionized Cournot oligopoly," European Journal of Political Economy, Elsevier, pages 353-374.
    8. Philippe Moës, 2006. "The production function approach to the Belgian output gap, estimation of a multivariate structural time series model," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, pages 59-91.
    9. Philip Du Caju & François Rycx & Ilan Tojerow, 2008. "Rent-Sharing and the Cyclicality of Wage Differentials," Working Papers CEB 08-035.RS, ULB -- Universite Libre de Bruxelles.
    10. Philip Du Caju & François Ryckx & Ilan Tojerow, 2009. "Inter-industry wage differentials : How much does rent sharing matter ?," Working Paper Research 180, National Bank of Belgium.
    11. Nicholas Lawson, 2010. "Is Collective Bargaining Pareto Efficient? A Survey of the Literature," Working Papers 1268, Princeton University, Department of Economics, Industrial Relations Section..
    12. Philip Du Caju & François Rycx & Ilan Tojerow, 2011. "Inter‐Industry Wage Differentials: How Much Does Rent Sharing Matter?," Manchester School, University of Manchester, pages 691-717.
    13. Ilan Tojerow & François Rycx, 2004. "Rent-sharing and the gender wage gap in Belgium," ULB Institutional Repository 2013/245700, ULB -- Universite Libre de Bruxelles.
    14. Kurt Brannas & A. M. M. Shahiduzzaman Quoreshi, 2010. "Integer-valued moving average modelling of the number of transactions in stocks," Applied Financial Economics, Taylor & Francis Journals, vol. 20(18), pages 1429-1440.
    15. Mauleon, Ana & Vannetelbosch, Vincent, 2004. "Bargaining with endogenous deadlines," Journal of Economic Behavior & Organization, Elsevier, pages 321-335.
    16. MAULEON, Ana & VANNETLEBOSCH, Vincent J., 2001. "Efficiency Wages, Unio-Firm Bargaining, and Strikes," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    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. Robert Plasman & François Rycx & Ilan Tojerow, 2006. "Industry wage differentials, unobserved ability, and rent-sharing : Evidence from matched worker-firm data, 1995-2002," Working Paper Research 90, National Bank of Belgium.
    19. Nicholas Lawson, 2011. "Is Collective Bargaining Pareto Efficient? A Survey of the Literature," Journal of Labor Research, Springer, vol. 32(3), pages 282-304, September.
    20. Vannetelbosch, Vincent J., 1997. "Wage bargaining with incomplete information in an unionized Cournot oligopoly," European Journal of Political Economy, Elsevier, pages 353-374.
    21. Milas, Costas, 1998. "Long-run structural estimation of labour market equations with an application to Greece1," Economic Modelling, Elsevier, pages 149-161.

    More about this item

    Keywords

    wages; bargaining; cointegration; non-nested tests;

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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