Search results for "wage-setting"
showing 3 items of 3 documents
Fairness Considerations in Labor Union Wage Setting : A Theoretical Analysis
2012
We consider a theoretical model in which unions not only take the outside option into account, but also base their wage-setting decisions on an internal reference, called the fairness reference. Wage and employment outcomes and the shape of the aggregate wage-setting curve depend on the weight and the size of the fairness reference relative to the outside option. If the fairness reference is relatively high compared to the outside option, higher wages and lower employment than in the standard model will prevail. If hit by an adverse technology shock, the economy will then react with a stronger downward adjustment in employment, whereas real wages are more rigid than in the standard model. W…
Wage-setting coordination in a small open economy
2022
This paper studies wage-setting coordination in a two-sector, open economy dynamic stochastic general equilibrium model. Two large sectoral unions anticipate the effects of their wage demands on aggregate variables. In an open economy, there are externalities that the unions can take into account to increase aggregate welfare, but the strategic interaction between the sectoral unions tends to erode this gain. When wage coordination takes place through a wage norm set by either of the sectors, this minimizes the strategic interaction. However, wage norms create welfare losses as sector-specific wage adjustment is required to make an efficient adjustment to shocks. Peer reviewed
Essays on labour market institutions and macroeconomic dynamics
2019
Labour market reforms play an important role in the public debate and policy recommendations. This thesis aims to find evidence on how labour market institutions are related to economic dynamics and adjustment. The thesis contains an introductory chapter and three essays. The first essay uses data of OECD countries to study whether differences in labour market institutions explain the differences in business cycle dynamics across OECD countries. The second and third essays use theoretical models to study centralized wage-setting and wage-setting coordination. The results of the first essay suggest that labour market institution variables have explanatory power for the heterogeneity in the v…