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Centralized Wage Setting, Wage Drift and Stabilization Policies under Trade Unionism

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  • Holmlund, Bertil

Abstract

This paper analyzes union behavior in a model w ith uncertainty aboutaggregate labor demand. When uncertainty is resolved, the labor market may be in excess demand or excess supply at the preset contractual wage. Wage drift occurs if excess demand is realized and the union's wage demand takes this into account. Stabilization policyinvolves government hirings in go od times and firings in bad ones. Public employment expansion in slumps increase s the union's wage demand. More surprisingly, a contraction of public employment in goodtimes will also produce a higher contractual wage. Copyright 1986 by Royal Economic Society.

Suggested Citation

  • Holmlund, Bertil, 1986. "Centralized Wage Setting, Wage Drift and Stabilization Policies under Trade Unionism," Oxford Economic Papers, Oxford University Press, vol. 38(2), pages 243-258, July.
    • Handle: RePEc:oup:oxecpp:v:38:y:1986:i:2:p:243-58
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    1. repec:bla:scandj:v:87:y:1985:i:2:p:197-225 is not listed on IDEAS
    2. repec:bla:scandj:v:79:y:1977:i:3:p:366-74 is not listed on IDEAS
    3. repec:bla:scandj:v:87:y:1985:i:2:p:234-61 is not listed on IDEAS
    4. Oswald, Andrew J., 1982. "Uncertainty and the trade union," Economics Letters, Elsevier, vol. 9(1), pages 105-111.
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    Cited by:

    1. Schlicht, Ekkehart, 1992. "Wage Generosity," Munich Reprints in Economics 3165, University of Munich, Department of Economics.
    2. Steinar Holden, 1998. "Wage Drift and the Relevance of Centralised Wage Setting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(4), pages 711-731, December.
    3. Tyrväinen, Timo, 1992. "Wage drift and error correction: Evidence from Finland," Bank of Finland Research Discussion Papers 35/1992, Bank of Finland.
    4. Ohlsson, Henry, 1992. "Job creation measures as activist fiscal policy -- an empirical analysis of policy reaction behavior," European Journal of Political Economy, Elsevier, vol. 8(2), pages 269-280, May.
    5. repec:zbw:bofrdp:1991_021 is not listed on IDEAS
    6. repec:zbw:bofrdp:1992_035 is not listed on IDEAS
    7. Tyrväinen, Timo, 1991. "Wage bargaining and the wage drift: Evidence from Finland," Bank of Finland Research Discussion Papers 21/1991, Bank of Finland.
    8. Tyrväinen, Timo, 1991. "Wage bargaining and the wage drift : Evidence from Finland," Research Discussion Papers 21/1991, Bank of Finland.
    9. Tyrväinen, Timo, 1992. "Wage drift and error correction: Evidence from Finland," Research Discussion Papers 35/1992, Bank of Finland.
    10. 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, May.
    11. Schmidt, Torsten, 2001. "Finanzreformen in der Bundesrepublik Deutschland: Analyse der Veränderungen der Finanzverfassung von 1949 bis 1989," RWI Schriften, RWI - Leibniz-Institut für Wirtschaftsforschung, volume 67, number 67.

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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