Efficiency Wages, Unio-Firm Bargaining, and Strikes
We consider efficiency wage effects in a union-firm bargaining model with private information. We show that efficiency wage effects do not necessarily increase the wage level at equilibrium. However, if it is commonly known that the union is stronger than the firm and the productivity enhancing effects of paying higher wages are sufficiently large, then efficiency wage effects still increase the wage of equilibrium. More surprisingly, we show that efficiency wage effects increase the strike activity.
|Date of creation:||01 May 2001|
|Date of revision:|
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- Lawrence H. Summers, 1988.
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NBER Working Papers
2590, National Bureau of Economic Research, Inc.
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- 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.
- Vannetelbosch, V. J., . "Testing between alternative wage-employment bargaining models using Belgian aggregate data," CORE Discussion Papers RP 1233, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Ariel Rubinstein, 2010.
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Levine's Working Paper Archive
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- Christopher Martin, .
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97-10, Economics and Finance Section, School of Social Sciences, Brunel University.
- Campbell, Carl M, III, 1993. "Do Firms Pay Efficiency Wages? Evidence with Data at the Firm Level," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 442-70, July.
- Kennan, John & Wilson, Robert, 1989. "Strategic Bargaining Models and Interpretation of Strike Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S87-130, Supplemen.
- Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991.
"Unemployment: Macroeconomic Performance and the Labour Market,"
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- Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, December.
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