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Efficiency Wages and Local versus Central Bargaining

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  • Rodseth, Asbjorn

Abstract

In a simple efficiency wage model, an employers' confederation always wants a lower wage than the individual employers. A centralized union normally wants a lower wage than local unions if the demand for labor in efficiency units is elastic, a higher wage if its is inelastic. Local unions that are willing to accept a reduction in the total wage bill to increase employment, want lower wages than their employers. In the long run, wages per efficiency unit of labor are independent of the bargaining system, while there is a trade-off between high employment and high hourly wages. Copyright 1993 by Royal Economic Society.

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  • Rodseth, Asbjorn, 1993. "Efficiency Wages and Local versus Central Bargaining," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 470-481, July.
    • Handle: RePEc:oup:oxecpp:v:45:y:1993:i:3:p:470-81
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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. 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.
    3. 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.
    4. Altenburg, Lutz & Straub, Martin, 2001. "Taxes on labour and unemployment in a shirking model with union bargaining," Labour Economics, Elsevier, vol. 8(6), pages 721-744, December.

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