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Is Unemployment Always Higher when Insiders Decide?

Author

Listed:
  • Filges, T.
  • Larsen, B.

Abstract

This paper challenges the traditional view that unemployment is high because insiders determine the union wage. The insiders in this paper are characterized by being more efficient when they search for a job than the outsiders, implying that they experience relatively less unemployment. We assume that wages are determined by a monopoly union and further that a union leader is elected by a majority voting rule. Insiders may prefer a lower wage than outsiders, implying the possibility of lower unemployment when insiders are decisive in the union than if outsiders were decisive in the union.

Suggested Citation

  • Filges, T. & Larsen, B., 2000. "Is Unemployment Always Higher when Insiders Decide?," Papers 00-02, Centre for Labour Market and Social Research, Danmark-.
    • Handle: RePEc:fth:clmsre:00-02
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    Keywords

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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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