IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-06j20002.html
   My bibliography  Save this article

Trade unions, efficiency wages and employment

Author

Listed:
  • Nicolas Sanz

    (ECONOMIX, Université Paris X-Nanterre)

  • Jean-Christophe Pereau

    (O.E.P., Université de Marne-la-Vallée)

Abstract

This short paper combines three of the main theories of the labour market (the shirking, turnover cost and union-firm bargaining models) in an integrated framework to highlight the consequences of their interactions for the determination of the wage and the firm's labour demand. We show that bargaining and both efficiency wage theories are mutually reinforcing, leading to higher wages. Like Weiss (1990), Fehr (1991) and Garino and Martin (2000), we find a "backward bending" labour demand curve along which the employment level increases with the wage for some range. However, the aim of this note is to show that the negotiated wage is always located on the downward sloping portion of the labour demand curve, whatever the source of the efficiency wage effects involved.

Suggested Citation

  • Nicolas Sanz & Jean-Christophe Pereau, 2006. "Trade unions, efficiency wages and employment," Economics Bulletin, AccessEcon, vol. 10(4), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-06j20002
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2006/Volume10/EB-06J20002A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Chatterjee, Satyajit & Cooper, Russell, 1989. "Multiplicity of Equilibria and Fluctuations in Dynamic Imperfectly Competitive Economies," American Economic Review, American Economic Association, vol. 79(2), pages 353-357, May.
    2. Garino, Gaia & Martin, Christopher, 2000. "Efficiency wages and union-firm bargaining," Economics Letters, Elsevier, vol. 69(2), pages 181-185, November.
    3. Summers, Lawrence H, 1988. "Relative Wages, Efficiency Wages, and Keynesian Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 383-388, May.
    4. Marti, Christopher, 1997. "Efficiency wages: combining the shirking and turnover cost models," Economics Letters, Elsevier, vol. 57(3), pages 327-330, December.
    5. Manning, Alan, 1990. "Imperfect Competition, Multiple Equilibria and Unemployment Policy," Economic Journal, Royal Economic Society, vol. 100(400), pages 151-162, Supplemen.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fernando Zanella, 2008. "Different times, different commitments, but the same old practices: failure of the efficiency wage model for socially devoted firms," Economics Bulletin, AccessEcon, vol. 10(9), pages 1-6.
    2. Nicolas Piluso & Gabriel Colletis, 2012. "Shareholder value and equilibrium rate of unemployment," Economics Bulletin, AccessEcon, vol. 32(4), pages 3233-3242.
    3. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2020. "Union, Efficiency of Labour and Endogenous Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 170-202, December.
    4. repec:ebl:ecbull:v:10:y:2008:i:9:p:1-6 is not listed on IDEAS
    5. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2014. "Unionised labour market, efficiency wage and endogenous growth," MPRA Paper 58332, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:10:y:2006:i:4:p:1-8 is not listed on IDEAS
    2. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2020. "Union, Efficiency of Labour and Endogenous Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 170-202, December.
    3. Palokangas, Tapio K., 2003. "Labour Market Regulation, Productivity-Improving R&D and Endogenous Growth," IZA Discussion Papers 720, Institute of Labor Economics (IZA).
    4. Koskela, Erkki & Stenbacka, Rune, 2003. "Equilibrium Unemployment Under Negotiated Profit Sharing," IZA Discussion Papers 840, Institute of Labor Economics (IZA).
    5. Natália Monteiro & Miguel Portela & Odd Straume, 2011. "Firm Ownership and Rent Sharing," Journal of Labor Research, Springer, vol. 32(3), pages 210-236, September.
    6. Koskela, Erkki & Stenbacka, Rune, 2003. "Equilibrium Unemployment Under Negotiated Profit Sharing," IZA Discussion Papers 840, Institute of Labor Economics (IZA).
    7. MAULEON, Ana & VANNETLEBOSCH, Vincent J., 2001. "Efficiency Wages, Unio-Firm Bargaining, and Strikes," LIDAM Discussion Papers IRES 2001010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Spatz, Julius, 2003. "The Impact of Structural Reforms on Wages and Employment: The Case of Formal versus Informal Workers in Bolivia," Kiel Working Papers 1186, Kiel Institute for the World Economy (IfW Kiel).
    9. Ramser, Hans Jürgen, 1992. "Nicht-kompetitive Gütermärkte im makroökonomischen Modell," Discussion Papers, Series I 263, University of Konstanz, Department of Economics.
    10. Julien, Ludovic A., 2003. "Chômage d’équilibre, équilibres multiples et défauts de coordination," L'Actualité Economique, Société Canadienne de Science Economique, vol. 79(4), pages 523-562, Décembre.
    11. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2014. "Unionised labour market, efficiency wage and endogenous growth," MPRA Paper 58332, University Library of Munich, Germany.
    12. Wim Meeusen & Vesna Stavrevska & Glenn Rayp, 2011. "Efficiency Wages, Unemployment Benefits and Union—Firm Wage Bargaining: The Issue of the Choice of the Outside Option," Journal of Labor Research, Springer, vol. 32(1), pages 75-86, March.
    13. repec:zbw:bofrdp:2003_019 is not listed on IDEAS
    14. Joao Ricardo Faria, 1998. "Supervision and Effort in an Intertemporal Efficiency Wage Model: The Role of the Solow Condition," Studies in Economics 9814, School of Economics, University of Kent.
    15. Jonas Agell & Helge Bennmarker, 2003. "Endogenous Wage Rigidity," CESifo Working Paper Series 1081, CESifo.
    16. Erkki Koskela & Ronnie Schöb, 2012. "Tax Progression under Collective Wage Bargaining and Individual Effort Determination," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51(3), pages 749-771, July.
    17. Drakopoulos, Stavros A., 2008. "The Concept Of Comparison Income: An Historical Perspective," MPRA Paper 8713, University Library of Munich, Germany.
    18. repec:pra:mprapa:43050 is not listed on IDEAS
    19. Michael H Belzer, 2018. "Work-stress factors associated with truck crashes: An exploratory analysis," The Economic and Labour Relations Review, , vol. 29(3), pages 289-307, September.
    20. Angela Cipollone & Paolo E. Giordani, 2012. "Animal Spirits in Entrepreneurial Innovation: Theory and Evidence," Working Papers CELEG 1201, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    21. Eskander Alvi, 1998. "Unemployment Insurance and Experience Rating in a Simple Model of Involuntary Unemployment," Public Finance Review, , vol. 26(4), pages 291-303, July.
    22. P R Agénor, 2005. "The Analytics of Segmented Labor Markets," Centre for Growth and Business Cycle Research Discussion Paper Series 52, Economics, The University of Manchester.
    23. Bai, Peiwen & Cheng, Wenli, 2020. "Relative earnings and firm performance: Evidence from publicly-listed firms in China, 2005–2012," International Review of Economics & Finance, Elsevier, vol. 66(C), pages 279-290.

    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-06j20002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.