IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/57050.html
   My bibliography  Save this paper

Corruption, efficiency wage and union leadership

Author

Listed:
  • Chaudhuri, Sarbajit
  • Ghosh Dastidar, Krishnendu

Abstract

This paper develops a model of determination of unionized wage in the presence of both collective bargaining and efficiency wage. The efficiency of each worker is positively related to both the wage and the unemployment rate in the economy. The unionized wage is greater than the efficiency wage. The firm finds it profitable to keep the unionized wage as close as possible to the efficiency wage. The union leader who is entrusted with the task of determining the unionized wage charges a bribe from the firm to keep the wage close to this level. The corrupt trade union leader and the management of the firm play a two-stage Nash bargaining game from where equilibrium unionized wage and the bribe are determined. The analysis leads to some interesting results which are important for anticorruption policy formulation.

Suggested Citation

  • Chaudhuri, Sarbajit & Ghosh Dastidar, Krishnendu, 2014. "Corruption, efficiency wage and union leadership," MPRA Paper 57050, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:57050
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/57050/1/MPRA_paper_57050.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Zimmermann, Laura V, 2012. "Labor Market Impacts of a Large-Scale Public Works Program: Evidence from the Indian Employment Guarantee Scheme," IZA Discussion Papers 6858, Institute of Labor Economics (IZA).
    2. Agell, Jonas & Lundborg, Per, 1992. "Fair wages, involuntary unemployment and tax policies in the simple general equilibrium model," Journal of Public Economics, Elsevier, vol. 47(3), pages 299-320, April.
    3. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "Foreign capital inflow, skilled-unskilled wage inequality and unemployment of unskilled labour in a fair wage model," Economic Modelling, Elsevier, vol. 27(1), pages 477-486, January.
    4. Basu, Kaushik & Bhattacharya, Sudipto & Mishra, Ajit, 1992. "Notes on bribery and the control of corruption," Journal of Public Economics, Elsevier, vol. 48(3), pages 349-359, August.
    5. Gary S. Becker & George J. Stigler, 1974. "Law Enforcement, Malfeasance, and Compensation of Enforcers," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 1-18, January.
    6. Makoto Yano, 2009. "The Foundation Of Market Quality Economics," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 1-32, March.
    7. Rose-Ackerman, Susan, 1975. "The economics of corruption," Journal of Public Economics, Elsevier, vol. 4(2), pages 187-203, February.
    8. Chaudhuri, Sarbajit & Ghosh Dastidar, Krishnendu, 2014. "Corruption in union leadership," MPRA Paper 53281, University Library of Munich, Germany.
    9. Andrei Shleifer & Robert Vishny, 1992. "Pervasive Shortages under Socialism," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 237-246, Summer.
    10. Agell, Jonas & Lundborg, Per, 1995. "Fair Wages in the Open Economy," Economica, London School of Economics and Political Science, vol. 62(247), pages 335-351, August.
    11. Banfield, Edward C, 1975. "Corruption as a Feature of Governmental Organization," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 587-605, December.
    12. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2010. "FDI in agricultural land, welfare and unemployment in a developing economy," Research in Economics, Elsevier, vol. 64(4), pages 229-239, December.
    13. Chaudhuri, Sarbajit, 2011. "Economic recession, skilled unemployment and welfare," Economic Modelling, Elsevier, vol. 28(3), pages 1435-1440, May.
    14. Cadot, Olivier, 1987. "Corruption as a gamble," Journal of Public Economics, Elsevier, vol. 33(2), pages 223-244, July.
    15. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sarbajit Chaudhuri, 2016. "Trade Unionism and Welfare Consequences of Trade and Investment Reforms in A Developing Economy," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 152-171, February.
    2. Chaudhuri, Sarbajit, 2014. "How can trade unionism affect welfare consequences of trade and investment reforms in a developing economy?," MPRA Paper 59063, University Library of Munich, Germany.
    3. Makoto Yano & Takashi Komatsubara, 2014. "Participation of Ordinary Investors and Stock Market Quality: A Comparison between Japanese and US Markets," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 537-558, December.
    4. Sarbajit Chaudhuri & Krishnendu Ghosh Dastidar & Sushobhan Mahata, 2022. "Cronyism and corruption in India: A game theoretic analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2607-2618, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Soumyen Sikdar & Sarbajit Chaudhuri, 2005. "A Model Of Corruption In An Investment Project," Public Economics 0510020, University Library of Munich, Germany.
    2. Chaudhuri, Sarbajit & Ghosh Dastidar, Krishnendu, 2014. "Corruption in union leadership," MPRA Paper 53281, University Library of Munich, Germany.
    3. Ajit Mishra, 2004. "Corruption: A Review," Dundee Discussion Papers in Economics 170, Economic Studies, University of Dundee.
    4. Nicolas Jacquemet, 2005. "La corruption comme une imbrication de contrats : Une revue de la littérature microéconomique," Working Papers 2005-29, Center for Research in Economics and Statistics.
    5. Marjit, Sugata & Mukherjee, Vivekananda & Mukherjee, Arijit, 2000. "Harassment, corruption and tax policy," European Journal of Political Economy, Elsevier, vol. 16(1), pages 75-94, March.
    6. Arjona Trujillo, Ana María, 2002. "La corrupción política: una revisión de la literatura," DE - Documentos de Trabajo. Economía. DE de021404, Universidad Carlos III de Madrid. Departamento de Economía.
    7. Cooter, Robert & Garoupa, Nuno, 2000. "The Virtuous Circle of Distrust: A Mechanism to Deter Bribes and Other Cooperative Crimes," Berkeley Olin Program in Law & Economics, Working Paper Series qt83c0k3wc, Berkeley Olin Program in Law & Economics.
    8. Ladislava Grochova & Tomas Otahal, 2011. "Corruption, Rule of Law, and Economic Efficiency: Selected Anecdotic Evidence of Bureaucratic Corruption from the Czech and Slovak Republics," MENDELU Working Papers in Business and Economics 2011-13, Mendel University in Brno, Faculty of Business and Economics.
    9. Chaudhuri, Sarbajit, 2011. "Economic recession, skilled unemployment and welfare," Economic Modelling, Elsevier, vol. 28(3), pages 1435-1440, May.
    10. Bac, Mehmet, 1998. "The Scope, Timing, and Type of Corruption," International Review of Law and Economics, Elsevier, vol. 18(1), pages 101-120, March.
    11. Gupta, Manash Ranjan & Dutta, Priya Brata, 2011. "Skilled-unskilled wage inequality and unemployment: A general equilibrium analysis," Economic Modelling, Elsevier, vol. 28(4), pages 1977-1983, July.
    12. Chaudhuri, Sarbajit, 2010. "Economic recession, demand constraint and labour markets in a developing economy," MPRA Paper 27433, University Library of Munich, Germany.
    13. Soumyatanu Mukherjee, 2015. "Input Trade Liberalisation and Wage-inequality with Non-traded Goods," Discussion Papers 2015-05, University of Nottingham, CREDIT.
    14. Blackburn, Keith & Forgues-Puccio, Gonzalo F., 2009. "Why is corruption less harmful in some countries than in others?," Journal of Economic Behavior & Organization, Elsevier, vol. 72(3), pages 797-810, December.
    15. Marjit, Sugata & Shi, Heling, 1998. "On controlling crime with corrupt officials," Journal of Economic Behavior & Organization, Elsevier, vol. 34(1), pages 163-172, January.
    16. Sarbajit Chaudhuri & Sushobhan Mahata & Salonkara Chaudhuri, 2022. "COVID-19 disaster and employment generation program in a developing economy," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 46-64, June.
    17. Yang, Der-Yuan, 2008. "On the elements and practices of monitoring," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 654-666, March.
    18. Pi, Jiancai & Zhang, Pengqing, 2018. "Skill-biased technological change and wage inequality in developing countries," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 347-362.
    19. Tetteh, Rebecca & Mohammed, Safura & Ahmed Azumah, Ayisha, 2017. "What is the effect of wages and supervision on productivity? The perspective of Sunyani Technical University staff," MPRA Paper 81473, University Library of Munich, Germany.
    20. Argandoña, Antonio, 2000. "Sobre la corrupción," IESE Research Papers D/418, IESE Business School.

    More about this item

    Keywords

    Corruption; Collective Bargaining; Efficiency Wage; Union; Firms;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:57050. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.