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Towards a Hierarchical Approach to Trade Union Behaviour

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  • Drakopoulos, Stavros A.

Abstract

The main starting point of this paper is the idea that trade unions do not only care about real wage level but also about a reference or aspiration wage level. After citing a number of empirical works, the paper argues that the attainment of the reference wage is a priority for the union. This implies that there is a hierarchical character in union objectives. A two-step union utility function is suggested in order to capture the change in priority once the prime objective (the reference wage level) was reached. The analysis is conducted in an efficient bargain framework, and shows that employment-wage combinations come into the picture only when the reference wage is reached. In a unionized economy, this implies that substantial increases in employment will take place only after the union reference wage has been met.

Suggested Citation

  • Drakopoulos, Stavros A., 1995. "Towards a Hierarchical Approach to Trade Union Behaviour," MPRA Paper 15597, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:15597
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    File URL: https://mpra.ub.uni-muenchen.de/15597/1/MPRA_paper_15597.pdf
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    References listed on IDEAS

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    4. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    5. Stavros A. Drakopoulos & John D.F. Skåtun, 1997. "Altruism, union utility and outsiders," Journal of Economic Studies, Emerald Group Publishing, vol. 24(6), pages 392-401, October.
    6. Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-445, June.
    7. Jacoby, Sanford M & Mitchell, Daniel J B, 1990. "Sticky Stories: Economic Explanations of Employment and Wage Rigidity," American Economic Review, American Economic Association, vol. 80(2), pages 33-37, May.
    8. Hart, Robert A. & Moutos, Thomas, 1991. "Efficient bargains in the context of recent labour market experience and policy," European Journal of Political Economy, Elsevier, vol. 7(2), pages 169-181, July.
    9. Drakopoulos, S A, 1994. "Hierarchical Choice in Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 8(2), pages 133-153, June.
    10. Robert J. Flanagan, 1976. "Wage Interdependence in Unionized Labor Markets," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 7(3), pages 635-682.
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    13. Holmlund, B. & Skedinger, P., 1988. "Wage Bargaining And Wage Drift: Evidence From The Swedish Wood Industry," Papers 419, Stockholm - International Economic Studies.
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    Cited by:

    1. Drakopoulos, Stavros A., 2003. "Choice Theoretical Foundations of Union Utility Functions Involving Discontinuities," MPRA Paper 90229, University Library of Munich, Germany.

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    More about this item

    Keywords

    Wages; Trade Unions; Trade Union Objectives;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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