Nominal Wage Flexibility in a Partly-Unionized Economy

Huw Dixon

The Manchester School of Economic & Social Studies, 1992, vol. 60, issue 3, 295-306

Abstract: This paper considers nominal wage flexibility in an economy with heterogeneous labor markets--unionized, competitive, and rigid. The response of unionized wages to demand depends on the behavior of the nonunionized.sector. With a rigid nonunionized sector, wages become pegged to the rigid wage and do not respond to output. With a competitive nonunionized.sector, unionized wages may become perfectly flexible, varying with demand to maintain constant employment. Aggregate wage flexibility depends very much on the interaction between labor markets. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:60:y:1992:i:3:p:295-306

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