Centralized Wage Setting, Wage Drift and Stabilization Policies under Trade Unionism

Bertil Holmlund ()

Oxford Economic Papers, 1986, vol. 38, issue 2, 243-58

Abstract: This paper analyzes union behavior in a model w ith uncertainty aboutaggregate labor demand. When uncertainty is resolved, the labor market may be in excess demand or excess supply at the preset contractual wage. Wage drift occurs if excess demand is realized and the union's wage demand takes this into account. Stabilization policyinvolves government hirings in go od times and firings in bad ones. Public employment expansion in slumps increase s the union's wage demand. More surprisingly, a contraction of public employment in goodtimes will also produce a higher contractual wage. Copyright 1986 by Royal Economic Society.

Date: 1986
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Working Paper: Centralized Wage Setting, Wage Drift and Stabilization Policies under Trade Unionism (1985)
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