Economics at your fingertips  

Heterogenous Skills and Monopoly Union: An Application of the Vertical Differentiation Theory

Xavier Wauthy

No 1993020, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper explores the link between vertical differentiation and the modelling of the labour market. We model a particular labour market in a framework directly inspired by vertical differentiation models developed in the field of industrial organization. This attempt is motivated by two facts. First, labour markets are differentiated in several respects (workers’ qualifications, firm’ requirements…). Second, (some) agents on the labour market are strategic players. Consequently we wish to investigate the specific role played by differentiation in situations where wages and market structures result from strategic interaction. As a consequence we show that product differentiation models are a useful tool for analysing the labour market. In our model, firms are differentiated by qualification requirements and can demand either qualified or unqualified labour. Each labour type is represented by its own union. We study the non-cooperative equilibrium that emerges when unions compete in wages to maximize wage-bills. Within this framework, it is shown how differentiation creates as asymmetry between unions that directly affects wages levels and labour market structures. We establish an explicit relation between equilibrium outcomes and the way available qualifications are fitted to firms’ requirements.

Keywords: labour market; wages (search for similar items in EconPapers)
Pages: 17
Date: 1993-01-01
References: Add references at CitEc
Citations: Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Virginie LEBLANC ().

Page updated 2021-07-21
Handle: RePEc:ctl:louvir:1993020