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Declining High Wage Industries, Efficient Labour Contracts, and Optimal Adjustment Assistance

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  • Frank Barry

Abstract

Wages frequently remain high in industries thrown into permanent decline. Previous analyses based on arbitrary wage rigidities have concluded that some degree of subsidization of the declining industry is warranted on efficiency grounds. The present paper proposes as an alternative an efficient bargaining model that generates wage stickiness and inefficiently low levels of intersectoral labor transfer. Expanding rather than declining sectors should be assisted under these circumstances.

Suggested Citation

  • Frank Barry, 1995. "Declining High Wage Industries, Efficient Labour Contracts, and Optimal Adjustment Assistance," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 94-107, November.
  • Handle: RePEc:cje:issued:v:28:y:1995:i:s1:p:94-107
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    Cited by:

    1. Frank Barry & Joe Durkan, 1996. "Team Aer Lingus and Irish Steel: An Application of the Declining High-Wage Industries Literature," Open Access publications 10197/5743, School of Economics, University College Dublin.
    2. Magee, Christopher, 2001. "Administered protection for workers: an analysis of the trade adjustment assistance program," Journal of International Economics, Elsevier, vol. 53(1), pages 105-125, February.
    3. Magee, Christopher, 2003. "Endogenous tariffs and trade adjustment assistance," Journal of International Economics, Elsevier, vol. 60(1), pages 203-222, May.

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