Union wage compression in a Right-to-Manage model

Thorsten Vogel

No 2007-009, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: Trade unions are consistently found to compress the wage distribution. Moreover, unemployment affects in particular low-skilled workers. The present paper argues that an extended Right-to-Manage model can account for both of these findings. In this model unions compress the wage distribution by raising wages of workers in low productivity industries (or low-skilled workers) above market clearing levels. Our analysis suggests that the most direct way to test this model would be via a test for stochastic dominance. We also allow for capital adjustments and compare union and non-union wage distributions in a general equilibrium framework.

Keywords: Trade unions; wage compression (search for similar items in EconPapers)
JEL-codes: J21 J31 J41 J51 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb649:sfb649dp2007-009

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