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Wage Centralization and the Scope of Firm-Union Bargaining: 'Efficient Bargains' or 'Labour Demand'?

Minas Vlassis ()

Manchester School, 2003, vol. 71, issue 3, 308-329

Abstract: This paper focuses on the role that wage centralization may play regarding the endogenous determination of the scope of firm-union bargaining. Findings suggest that, as long as the alternative wage is sufficiently low, compliance with the centralized (minimum) wage deal is sustained by wage-takers (small inefficient employers and their employees), and 'labour demand' proves to be an equilibrium bargaining arrangement for wage-setters (large efficient employers and their workers' union). Otherwise, and also if union power is low enough, 'efficient bargains' may be unanimously chosen by the latter agents, as a strategic device to counter losses arising from wage-undercutting rivalry. Copyright 2003 Blackwell Publishing Ltd and The Victoria University of Manchester.

Date: 2003
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