A Search Model in a Segmented Labour Market: the Odd Role of Unions

Chiara Broccolini (), Marco Lilla () and Stefano Staffolani
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Chiara Broccolini: Universita' Politecnica delle Marche, Dipartimento di Economia

No 349, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: Assuming random matching productivity, we present a search equilibrium model where each match ends in a vacancy, in a temporary job or in a permanent job. Centralized bargaining sets the wage rate of permanent workers whereas rms decide unilaterally the wage rate of temporary workers. In this segmented labour market: a) the wage setting function can be downward sloping; b) higher union bargaining power leads to higher wage and higher unemployment; c) average worker productivity shows a maximum with respect to union bargaining power.

Keywords: Productivity; Search Model; Temporary contract; Unemployment; Unions (search for similar items in EconPapers)
JEL-codes: J31 J51 J64 (search for similar items in EconPapers)
Pages: 18
Date: 2010-10
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:anc:wpaper:349

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