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Union bargaining power, relative wages, and efficiency in Canada

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  • Timothy C.G. Fisher
  • Robert G. Waschik

Abstract

We use a computable general equilibrium model incorporating trade unions, efficient Nash contracts, existing distortions, and international trade to measure the deadweight loss in Canada arising from the ability of unions to raise wages above competitive levels. The model incorporates two features new to CGE analysis: parameterization of union bargaining power and variations in union preferences. Estimates indicate the deadweight loss to be no more than 0.04 per cent of GNP. However, the small aggregate effect masks considerable adjustments at the industry level, in imports and exports, and in the distribution of income. Adjustments are also larger with employment-oriented unions.

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  • Timothy C.G. Fisher & Robert G. Waschik, 2000. "Union bargaining power, relative wages, and efficiency in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 742-765, August.
    • Handle: RePEc:cje:issued:v:33:y:2000:i:3:p:742-765
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    Cited by:

    1. Tan, Ruipeng & Xu, Mengmeng & Sun, Chuanwang, 2021. "The impacts of energy reallocation on economic output and CO2 emissions in China," Energy Economics, Elsevier, vol. 94(C).
    2. Monojit Chatterji, 2000. "Trade Union Power and Economic Efficiency," Dundee Discussion Papers in Economics 108, Economic Studies, University of Dundee.
    3. Cao, Hongjian & Wang, Bizhe & Li, Ke, 2021. "Regulatory policy and misallocation: A new perspective based on the productivity effect of cleaner production standards in China's energy firms," Energy Policy, Elsevier, vol. 152(C).
    4. Kong, Qunxi & Tong, Xin & Peng, Dan & Wong, Zoey & Chen, Huy, 2021. "How factor market distortions affect OFDI: An explanation based on investment propensity and productivity effects," International Review of Economics & Finance, Elsevier, vol. 73(C), pages 459-472.
    5. Chi-Hsin Wu & Chia-Ying Liu, 2010. "Do Trade Unions Deteriorate International Competitiveness? Reconciliation of the Discrepancy Between Theory and Practice," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 38(2), pages 145-155, June.
    6. Gustavo Gonzaga & Beatriz Muriel & Cristina Terra, 2005. "Abertura Comercial, Desigualdade Salarial E Sindicalização," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] 073, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    7. Ignacio Tavares ARAUJO JUNIOR & Nayana RUTH FIGUEREDO, 2008. "Unions and Economic Inefficiency in Brazil: A CGE Approach," EcoMod2008 23800005, EcoMod.

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