When is there more employment, with individual or collective wage bargaining?

Artikel

In a standard Diamond-Mortensen-Pissarides labour market with frictions, the authors seek to determine when there is more employment with individual wage bargaining than with collective wage bargaining, using a wage equation generated by the standard total surplus sharing rule. Using a Cobb-Douglas production function, they find that if the bargaining power of the individual is high compared to the bargaining power of the union, there is more unemployment with individual wage setting and vice versa. When the individual worker and the union have the same bargaining power, if the cost of opening a vacancy is sufficiently high, there is more unemployment with individual wage setting. Finally, for a constant marginal product of labour production function AL, when the individual worker and the union have the same bargaining power, individual bargaining produces more unemployment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Economics: The Open-Access, Open-Assessment E-Journal ; ISSN: 1864-6042 ; Volume: 13 ; Year: 2019 ; Issue: 2019-15 ; Pages: 1-25 ; Kiel: Kiel Institute for the World Economy (IfW)

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; One, Two, and Multisector Growth Models
• Subject: Matching frictions ; unemployment ; individual and collective wage setting

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): García Martínez, José Ramón ; Sorolla, Valeri
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2019

Further information

• DOI: doi:10.5018/economics-ejournal.ja.2019-15
• Handle: http://hdl.handle.net/10419/193190
• Last update: 10.03.2025, 11:43 AM CET