 When is there more employment, with individual or collective wage bargaining?José Ramón García Martínez and Valeri Sorolla Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2019, vol. 13, No 2019-15, 25 pages Abstract: In a standard Diamond-Mortensen-Pissarides labour market with frictions, the authors seek to determine when there is more employment with individual wage bargaining than with collective wage bargaining, using a wage equation generated by the standard total surplus sharing rule. Using a Cobb-Douglas production function, they find that if the bargaining power of the individual is high compared to the bargaining power of the union, there is more unemployment with individual wage setting and vice versa. When the individual worker and the union have the same bargaining power, if the cost of opening a vacancy is sufficiently high, there is more unemployment with individual wage setting. Finally, for a constant marginal product of labour production function AL, when the individual worker and the union have the same bargaining power, individual bargaining produces more unemployment. Keywords: Matching frictions; unemployment; individual and collective wage setting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifweej:201915 DOI: 10.5018/economics-ejournal.ja.2019-15 Access Statistics for this article Economics - The Open-Access, Open-Assessment E-Journal (2007-2020) is currently edited by Dennis J. Snower More articles in Economics - The Open-Access, Open-Assessment E-Journal (2007-2020) from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC. |
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