Delegation and Wage Determination in Trade Unions

Laszlo Goerke and Carsten Hefeker

LABOUR, 2000, vol. 14, issue 3, 393-416

Abstract: Delegation of wage determination is modelled as the transferral of decision‐making rights to better‐informed agents. The rank and file of trade unions has less information and can, therefore, benefit from delegation. However, delegation might be disadvantageous for union members, since delegates pursue their own objectives. Also, delegates might incur a utility reduction, since becoming a delegate implies forfeiting a better‐paid outside option. We investigate under what conditions delegation of wage bargaining power is beneficial for union members and their potential leaders. The wage and employment effects of delegation are derived.

Date: 2000
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