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|
|Publication status:||Published in Labour 3.8(1994): pp. 567-580|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
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- George A. Akerlof, 1969. "Relative Wages and the Rate of Inflation," The Quarterly Journal of Economics, Oxford University Press, vol. 83(3), pages 353-374.
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- Drakopoulos, S A, 1992. "Psychological Thresholds, Demand and Price Rigidity," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(2), pages 152-168, June.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 3-39, June.
- Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
- Corden, W M, 1981. "Taxation, Real Wage Rigidity and Employment," Economic Journal, Royal Economic Society, vol. 91(362), pages 309-330, June. Full references (including those not matched with items on IDEAS)
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