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Local versus Central Wage Bargaining with Endogenous Investments

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  • Hoel, Michael

Abstract

Investment behavior may depend on whether wage bargaining takes place centrally or locally (at the firm level). The outcome of the wage bargain will in turn depend on previous investments. Ignoring other differences between the two bargaining regimes, endogenous investments imply that wages are lower and profits higher under local wage bargaining than under central bargaining. This does not necessarily imply that employment is highest under local bargaining, since investments may differ in the two cases. With a Nash bargaining solution, however, reasonable assumptions imply that employment is highest under local wage bargaining. Copyright 1990 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Hoel, Michael, 1990. "Local versus Central Wage Bargaining with Endogenous Investments," Scandinavian Journal of Economics, Wiley Blackwell, vol. 92(3), pages 453-469.
    • Handle: RePEc:bla:scandj:v:92:y:1990:i:3:p:453-69
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    Citations

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    Cited by:

    1. Marcus Dittrich, 2010. "Welfare Effects of Local versus Central Wage Bargaining," LABOUR, CEIS, vol. 24(1), pages 26-34, March.
    2. Brunello, Giorgio, 1998. "Does centralised bargaining reduce individual effort?," European Journal of Political Economy, Elsevier, vol. 14(2), pages 381-406, May.
    3. repec:clr:wugarc:y:1993:v:19i:4p:423 is not listed on IDEAS
    4. Claus Hansen, 1999. "Long-run impact of increased wage pressure," Journal of Economics, Springer, vol. 69(2), pages 141-157, June.
    5. Hoel, Michael, 1997. "Coordination of environmental policy for transboundary environmental problems?," Journal of Public Economics, Elsevier, vol. 66(2), pages 199-224, November.
    6. repec:zbw:bofrdp:1990_024 is not listed on IDEAS
    7. Pohl, Hartmut, 1998. "Die Rolle von Arbeitsmärkten bei der Qualitätsauswahl in vertikal differenzierten Märkten," Discussion Papers, Series I 292, University of Konstanz, Department of Economics.
    8. Sjögren, Tomas, 2017. "Can a Marginally Distorted Labor Market Improve Capital Accumulation, Output and Welfare?," Umeå Economic Studies 946, Umeå University, Department of Economics.
    9. Paul Frijters, 1997. "Capital scarcities as a reason for high unemployment in the European Union," Macroeconomics 9706002, University Library of Munich, Germany.
    10. Jean-François Fagnart & Marc Germain, 1997. "Investment and technological choice in a right-to-manage model," Journal of Economics, Springer, vol. 66(3), pages 223-247, October.
    11. Julia Müller & Thorsten Upmann, 2013. "Centralised Labour Market Negotiations," CESifo Working Paper Series 4470, CESifo.
    12. Dittrich, Marcus, 2006. "Welfare Effects of Union Bargaining Centralisation in a Two-Sector Economy," MPRA Paper 11, University Library of Munich, Germany, revised Sep 2006.
    13. Karl Ove Moene & Michael Wallerstein, 1993. "The Economic Performance of Different Bargaining Institutions," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 19(4), pages 423-450.
    14. Holm, Pasi & Honkapohja, Seppo & Koskela, Erkki, 1990. "A monopoly union model of wage determination with taxes and endogenous capital stock : an empirical application to the finnish manufacturing industry," Research Discussion Papers 24/1990, Bank of Finland.
    15. Schimmelpfennig, Axel, 1999. "Whodunnit? Changes in the relative demand for unskilled and skilled labor," Kiel Working Papers 914, Kiel Institute for the World Economy (IfW Kiel).
    16. Frank Scharr, 2005. "Tarifbindung, Rententeilung und Konzessionsverträge als Einflussgrößen der Lohnhöhe in Unternehmen : eine Untersuchung mit Mikrodaten für thüringische Firmen," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 39.
    17. Kornelius Kraft, 2006. "Wage versus efficient bargaining in oligopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(7), pages 595-604.

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