Effect of the Union under Moral Hazard

Kyota Eguchi
Additional contact information
Kyota Eguchi: Faculty of Economics, University of Tokyo.

No CIRJE-F-47, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We consider why blue collar workers are more likely to organize unions than white collar workers from a view of commitment devices and the moral hazard problem. Under contractual incompleteness, a firm cannot promise to keep employment level high ex ante. However, if unions resist firms' dismissal policies, unions can play a significant role as commitment devices for job security. Then, since firms can decrease wage and increase employment level, the profit of firms with unions can be more than that without unions. Furthermore, we show that asymmetric information on workers' actions weakens the role of unions as commitment devices. The result explains the above question since efforts level of white collar workers is difficult to observe.

Pages: 28 pages
Date: 1999-04
New Economics Papers: this item is included in nep-mic
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cirje.e.u-tokyo.ac.jp/research/dp/99/cf47/contents.htm (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:tky:fseres:99cf47

Access Statistics for this paper

More papers in CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo Contact information at EDIRC.
Bibliographic data for series maintained by CIRJE administrative office ().