Efficiency wages, insiders-outsiders and wages determination: theories and evidence

Francisco Carneiro

Brazilian Journal of Political Economy, 1997, vol. 17, issue 2, 278-298

Abstract: The article discusses alternative explanations for the rigidity of real wages in thepresence of involuntary unemployment. It is argued that real wage rigidity can be viewed asthe result of two factors: (i) trade unions’ bargaining power, in the form of insider power;and (ii) the deliberate action of firms which try to avoid the costs associated with labourturnover. The article also presents recent empirical evidence on the importance of insiderfactors in the process of wage determination for a number of countries. JEL Classification: J20; J31.

Keywords: Labour demand; labor supply; wages (search for similar items in EconPapers)
Date: 1997
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