Collective bargaining, firm heterogeneity and unemployment

Juan F Jimeno and Carlos Thomas

European Economic Review, 2013, vol. 59, issue C, 63-79

Abstract: We compare labor market outcomes under firm-level and sector-level bargaining in a one-sector Mortensen-Pissarides economy with firm-specific productivity shocks. Our main theoretical results are two-fold. First, unemployment is lower under firm-level bargaining, due both to a lower job destruction rate and a higher job-finding rate. Key to this result is the interplay between firm heterogeneity and wage compression under sector-level bargaining. Second, introducing efficient opting-out of sector-level agreements suffices to bring unemployment down to its level under decentralized bargaining.

Keywords: Collective bargaining; Firm-specific shocks; Wage compression; Unemployment (search for similar items in EconPapers)
JEL-codes: E10 J64 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (48)

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Working Paper: Collective bargaining, firm heterogeneity and unemployment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:59:y:2013:i:c:p:63-79

DOI: 10.1016/j.euroecorev.2012.11.009

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