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Trades unions, real wages and full employment

Listed author(s):
  • Mark Hayes

    ()

    (University of Cambridge)

A core proposition of Keynes’s General Theory is that money wages do not determine real wages or employment at the aggregate level in a closed economy. What then is the macroeconomic role of trades unions in the determination of real wages and employment? What are the mechanisms through which bargaining power takes effect? The paper argues that trades unions play important roles in countering employer monopsony as well as in determining the non-wage terms and conditions of employment and the incidence of risk between capital and labour. In the former role, it is the money wage that is relevant, while the latter role is a factor in the determination of aggregate real income and profit, yet the aggregate real wage itself and the wage share are residuals. Trades unions have the potential to support the promotion of full employment with price stability as part of a policy of demand management through the adoption of co-ordinated wage bargaining institutions.

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File URL: http://www.postkeynesian.net/downloads/working-papers/PKWP1615_b6I7c3w.pdf
File Function: First version, 2016
Download Restriction: no

Paper provided by Post Keynesian Economics Study Group (PKSG) in its series Working Papers with number PKWP1615.

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Length: 12
Date of creation: Aug 2016
Handle: RePEc:pke:wpaper:pkwp1615
Contact details of provider: Web page: http://www.postkeynesian.net

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  1. Marc Lavoie & Stockhammer Engelbert, 2013. "Wage-Led Growth: An Equitable Strategy for Economic Recovery," Post-Print hal-01343664, HAL.
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