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Is Unemployment Always Higher When Insiders Decide?

Author

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  • Filges, Trine

    (Department of Economics, Copenhagen Business School)

  • Larsen, Birthe

    (Department of Economics, Copenhagen Business School)

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.

Suggested Citation

  • Filges, Trine & Larsen, Birthe, 2000. "Is Unemployment Always Higher When Insiders Decide?," Working Papers 13-2000, Copenhagen Business School, Department of Economics.
    • Handle: RePEc:hhs:cbsnow:2000_013
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    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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