UNIONS AND UNEMPLOYMENT BENEFITS: SOME INSIGHTS FROM A SIMPLE THREE-PLAYER EXAMPLE

Harald Wiese ()
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Harald Wiese: Universität Leipzig, Postfach 920, 04009 Leipzig, Germany

International Game Theory Review (IGTR), 2011, vol. 13, issue 04, 383-402

Abstract: The aim of this paper is to analyze the interconnections between employment and unionization. We will also see how unemployment benefits drive the interplay of employment and unionization. The basic input into our model stems from cooperative game theory. Building on the Shapley value, several values for TU games with coalition structures have been presented in the literature, most notably by Aumann and Drèze and Owen. We present a value that is capable of dealing with unemployment and unionization. We show that unemployment benefits increase wages but contribute to unemployment, that unemployment can be voluntary, and that unions tend to be beneficial for employed workers if there is overstaffing.

Keywords: Aumann-Drèze value; Owen value; Shapley value; outside option; unionization; unemployment benefits; C71; J51 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1142/S0219198911003052

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