Unemployment and the "Labour-Management Conspiracy"
Management and a union bargain sequentilally, first choosing a contract which will later determine the level of employment, and then choosing a wage. The government then chooses an output subsidy, after which the industry chooses employment according to the contract. The presence of a natural turnover rate in the unionized sector creates unemployment whenever the union wage exceeds the competitive wage. Government intervention can increase both the equilibrium amount of unemployment and worsen the intersectoral allocation of labour; intervention can also reverse the relation between th eequilibrium amount of unemployment andthe flexibility of the labour market.
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Royal Economic Society, vol. 110(460), pages 113-35, January.
- Karp, Larry & Paul, Thierry, 1998. "Unemployment and the "Labour-Management Conspiracy"," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4w19p9qp, Department of Agricultural & Resource Economics, UC Berkeley.
- Karp, L. & Paul, T., 1998. "Unemployment and the "Labour-Management Conspiracy"," G.R.E.Q.A.M. 98a27, Universite Aix-Marseille III.
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CEP Discussion Papers
dp0071, Centre for Economic Performance, LSE.
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- Rodrik, Dani, 1987. "Policy Targeting with Endogenous Distortions: Theory of Optimum Subsidy Revisited," The Quarterly Journal of Economics, MIT Press, vol. 102(4), pages 903-11, November.
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