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Wage Bargaining and Monopsony

  • Torberg Falch

    ()

    (Department of Economics, Norwegian University of Science and Technology)

  • Bjarne Strøm

    ()

    (Department of Economics, Norwegian University of Science and Technology)

This paper identifies three possible outcomes of higher relative firm bargaining power in a unionized firm facing an upward sloping labor supply curve. The conventional regime with reduced wage and higher employment corresponds to firm bargaining power below a certain critical value. A supply constrained regime where increased firm bargaining power reduces both wages and employment occurs when the bargaining power is above another critical level. A novel result is that we identify a third regime, with firm bargaining power between these critical levels, where changes in relative bargaining power does not affect wages and employment.

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Paper provided by Department of Economics, Norwegian University of Science and Technology in its series Working Paper Series with number 4304.

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Length: 24 pages
Date of creation: 01 Sep 2004
Date of revision:
Handle: RePEc:nst:samfok:4304
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  12. Torberg Falch & Bjarne Strøm, 2004. "Wage Bargaining and Monopsony," Working Paper Series 4304, Department of Economics, Norwegian University of Science and Technology.
  13. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-78, September.
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  15. Falch, Torberg, 2001. "Collective bargaining in the public sector and the role of budget determination," European Journal of Political Economy, Elsevier, vol. 17(1), pages 75-99, March.
  16. Douglas O. Staiger & Joanne Spetz & Ciaran S. Phibbs, 2010. "Is There Monopsony in the Labor Market? Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 211-236, 04.
  17. Marlow, Michael L & Orzechowski, William, 1996. "Public Sector Unions and Public Spending," Public Choice, Springer, vol. 89(1-2), pages 1-16, October.
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  19. McDonald, Ian M & Suen, Anthony, 1992. "On the Measurement and Determination of Trade Union Power," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(2), pages 209-24, May.
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