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Wage Centralization and the Scope of Firm–Union Bargaining: ‘Efficient Bargains’ or ‘Labour Demand’?

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  • Minas Vlassis

Abstract

This paper focuses on the role that wage centralization may play regarding the endogenous determination of the scope of firm–union bargaining. Findings suggest that, as long as the alternative wage is sufficiently low, compliance with the centralized (minimum) wage deal is sustained by wage‐takers (small inefficient employers and their employees), and ‘labour demand’ proves to be an equilibrium bargaining arrangement for wage‐setters (large efficient employers and their workers’ union). Otherwise, and also if union power is low enough, ‘efficient bargains’ may be unanimously chosen by the latter agents, as a strategic device to counter losses arising from wage‐undercutting rivalry.

Suggested Citation

  • Minas Vlassis, 2003. "Wage Centralization and the Scope of Firm–Union Bargaining: ‘Efficient Bargains’ or ‘Labour Demand’?," Manchester School, University of Manchester, vol. 71(3), pages 308-329, June.
    • Handle: RePEc:bla:manchs:v:71:y:2003:i:3:p:308-329
    DOI: 10.1111/1467-9957.00348
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    References listed on IDEAS

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    Cited by:

    1. Petrakis, Emmanuel & Vlassis, Minas, 2005. "The endogenous national minimum wage institution," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 747-762, December.
    2. Pei-Cheng Liao, 2014. "Strategic Delegation of Multiple Tasks," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 77-96, June.
    3. Minas Vlassis & Nick Drydakis, 2012. "Wage discrimination and antidiscrimination policy in unionized industries," Journal of Economics, Springer, vol. 105(1), pages 45-62, January.
    4. Julia Müller & Thorsten Upmann, 2013. "Centralised Labour Market Negotiations," CESifo Working Paper Series 4470, CESifo.
    5. L. Monroy & V. Rubiales & A. M. Mármol, 2017. "The conservative Kalai–Smorodinsky solution for multiple scenario bargaining," Annals of Operations Research, Springer, vol. 251(1), pages 285-299, April.
    6. Kopel, Michael & Petrakis, Emmanuel & Ressi, Anna, 2019. "Endogenous scope of firm-union bargaining with vertical pay comparisons," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 39-52.
    7. Vlassis, Minas & Mamakis, Stefanos & Varvataki, Maria, 2019. "Taxes, social insurance contributions, and undeclared labour in unionized oligopoly," Economics Letters, Elsevier, vol. 183(C), pages 1-1.

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