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Centralized Wage Setting, Wage Drift and Stabilization Policies under Trade Unionism

Author

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  • Holmlund, Bertil

    (Research Institute of Industrial Economics (IFN))

Abstract

This paper analyzes union behavior in a model w ith uncertainty aboutaggregate labor demand. When uncertainty is resolved, the labor market may be in excess demand or excess supply at the preset contractual wage. Wage drift occurs if excess demand is realized and the union's wage demand takes this into account. Stabilization policyinvolves government hirings in go od times and firings in bad ones. Public employment expansion in slumps increase s the union's wage demand. More surprisingly, a contraction of public employment in goodtimes will also produce a higher contractual wage. Copyright 1986 by Royal Economic Society.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Holmlund, Bertil, 1985. "Centralized Wage Setting, Wage Drift and Stabilization Policies under Trade Unionism," Working Paper Series 147, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0147
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    References listed on IDEAS

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    1. Pencavel, John, 1985. " Wages and Employment under Trade Unionism: Microeconomic Models and Macroeconomic Applications," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 197-225.
    2. Calmfors, Lars & Horn, Henrik, 1985. " Classical Unemployment, Accommodation Policies and Adjustment of Real Wages," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 234-261.
    3. Oswald, Andrew J., 1982. "Uncertainty and the trade union," Economics Letters, Elsevier, vol. 9(1), pages 105-111.
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    Cited by:

    1. Ohlsson, Henry, 1992. "Job creation measures as activist fiscal policy -- an empirical analysis of policy reaction behavior," European Journal of Political Economy, Elsevier, vol. 8(2), pages 269-280, May.

    More about this item

    Keywords

    Trade unions; wage setting; wage drift; uncertainty;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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