Unions in a Frictional Labor Market

Per Krusell and Leena Rudanko

No 18218, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A labor market with search and matching frictions, where wage setting is controlled by a monopoly union that follows a norm of wage solidarity, is found vulnerable to substantial distortions associated with holdup. With full commitment to future wages, the union achieves efficient hiring in the long run, but hikes up wages in the short run to appropriate rents from firms. Without commitment, in a Markov-perfect equilibrium, hiring is too low both in the short and the long run. The quantitative impact is demonstrated in an extended model with partial union coverage and multi- period union contracting.

JEL-codes: E02 E24 J51 J64 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Note: EFG LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published as Per Krusell & Leena Rudanko, 2016. "Unions in a frictional labor market," Journal of Monetary Economics, vol 80, pages 35-50.

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Related works:
Journal Article: Unions in a frictional labor market (2016)
Working Paper: Unions in a frictional labor market (2016)
Working Paper: Unions in a Frictional Labor Market (2015)
Working Paper: Unions in a frictional labor market (2015)
Working Paper: Unions in a Frictional Labor Market (2012)
Working Paper: Unions in a Frictional Labor Market (2011)
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