Trade Union Priorities and Wage Rigidity
The starting point of the paper is that trade unions engage in substitution once certain targets have been met. This implies that a priority-based or hierarchical model might be a better approximation to union behaviour. This model requires a two-part union utility function which changes when a satisfactory (or target) level of the priority variable (e.g. the wage rate) is met. After demonstrating the workings of such a model in a monopoly union framework, it is shown that when the wage is below the target level, there is real wage rigidity. Employment increases only when the target wage has been achieved
|Date of creation:||May 1994|
|Date of revision:|
|Publication status:||Published in Labour 3.8(1994): pp. 567-580|
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