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Nominal Wage Flexibility in a Partly-Unionized Economy

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  • Dixon, Huw

Abstract

This paper considers nominal wage flexibility in an economy with heterogeneous labor markets--unionized, competitive, and rigid. The response of unionized wages to demand depends on the behavior of the nonunionized.sector. With a rigid nonunionized sector, wages become pegged to the rigid wage and do not respond to output. With a competitive nonunionized.sector, unionized wages may become perfectly flexible, varying with demand to maintain constant employment. Aggregate wage flexibility depends very much on the interaction between labor markets. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Dixon, Huw, 1992. "Nominal Wage Flexibility in a Partly-Unionized Economy," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(3), pages 295-306, September.
    • Handle: RePEc:bla:manch2:v:60:y:1992:i:3:p:295-306
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    Cited by:

    1. Le, Vo Phuong Mai & Meenagh, David & Minford, Patrick & Wickens, Michael, 2011. "How much nominal rigidity is there in the US economy? Testing a new Keynesian DSGE model using indirect inference," Journal of Economic Dynamics and Control, Elsevier, vol. 35(12), pages 2078-2104.

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