Manipulating the Constraints: hard debt, efficiency wages, and union rents

Linus Wilson

No 156, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Several papers have argued that firms can hide profits from unions with hard debt commitments. Alternatively, here we argue that unions can manipulate the non-shirking constraint and win higher efficiency wages. By creating a culture of mistrust and an opposition to supervision ex ante, unions can ensure higher wages ex post. This resistance to monitoring, nevertheless, leads to deadweight losses. In the absence of debt, it is shown that a sufficiently strong union will opt to minimise monitoring costs because the non-shirking constraint will no longer bind.

Keywords: efficiency wages; unions; commitment; bonds (search for similar items in EconPapers)
JEL-codes: G32 J41 (search for similar items in EconPapers)
Date: 2003-04-01
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ora.ox.ac.uk/objects/uuid:eceb9ca0-1046-43e7-b710-e7657b598d22 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:156

Access Statistics for this paper

More papers in Economics Series Working Papers from University of Oxford, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Anne Pouliquen ( this e-mail address is bad, please contact ).