Union Power as a Reason for Europe Not to Introduce Experience Rating?

Florian Baumann () and Nikolai Stähler

Journal of Institutional and Theoretical Economics (JITE), 2008, vol. 164, issue 3, 568-585

Abstract: Theoretical economic literature dealing with the financing of unemployment insurance finds that experience rating helps to solve the externality caused by individually efficient but socially inefficient dismissals and hence reduces unemployment. This is, however, found in models where workers and firms bargain over wages individually. Introducing unionized wage bargaining - which at least in continental Europe is a defining feature of the economy - may reverse the result. This paper provides an example showing that wage setting by a monopoly union can result in an increase in unemployment

JEL-codes: J30 J64 J65 J68 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (2)

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