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Trade Union Priorities and Wage Rigidity

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  • Drakopoulos, Stavros A.

Abstract

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

Suggested Citation

  • Drakopoulos, Stavros A., 1994. "Trade Union Priorities and Wage Rigidity," MPRA Paper 35791, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35791
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade Unions; Wages;

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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