IDEAS home Printed from
   My bibliography  Save this paper

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


  • Holmlund, Bertil

    (Research Institute of Industrial Economics (IFN))


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

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    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.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    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.
    2. Tyrväinen, Timo, 1992. "Wage drift and error correction: Evidence from Finland," Research Discussion Papers 35/1992, Bank of Finland.

    More about this item


    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


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0147. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisabeth Gustafsson). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.