Collective Bargaining under Non-Binding Contracts

Sabien Dobbelaere and Roland Iwan Luttens ()
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Roland Iwan Luttens: University of Amsterdam

No 5518, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We introduce collective bargaining in a static framework where the firm and its risk-neutral employees negotiate over wages in a non-binding contract setting. Our main result is the equivalence between the non-binding collective equilibrium wage-employment contract and the equilibrium contract under binding risk-neutral efficient bargaining. We also demonstrate that our non-cooperative equilibrium wages and profits coincide with the Owen values of the corresponding cooperative game with the coalitional structure that follows from unionization.

Keywords: collective bargaining; union; firm; bargaining power; non-binding contract (search for similar items in EconPapers)
JEL-codes: C71 J51 L20 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2011-02
New Economics Papers: this item is included in nep-bec, nep-gth and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Collective Bargaining under Non-binding Contracts (2011)
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