Optimum organization of the labor market in a small open economy
In most countries labor is organzed in cooperating skill-speci c unions rather than in industrial unions or separately bargaining skill-speci c unions. Within an extremely simple model of a small open economy facing imperfect competition we show that this way of organizing labor can be explained as the outcome of rational (optimizing) behavior on the part of the unions and the employers. Organizing labor in local industrial cartels (regardless of skill) or a single economy wide cartel results in a real wage level that is inappropriately low both from the point of view of labor and the society as a whole unless labor has close to monopoly power in the wage setting process. Organizing labor in local or economy wide skill-speci c unions may result in a wage level that is too high. In addition, a labor market organized in non-cooperating unions is likely to be unstable. This dilemma calls for a compromise: A cartel of cooperating, independent skill-speci c unions. The degree and the form of the cooperation depend inter alia on the bargaining power of the employer, the number of skills and competing rms and the rigidity with which the unions enforce lines of demarcations.
Year of publication: |
2008
|
---|---|
Authors: | Blomgren-Hansen, Niels |
Publisher: |
Frederiksberg : Copenhagen Business School (CBS), Department of Economics |
Saved in:
freely available
Series: | Working paper ; 3-2008 |
---|---|
Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 585252025 [GVK] hdl:10419/208549 [Handle] hdl:10398/7599 [Handle] |
Source: |
Persistent link: https://www.econbiz.de/10012142350
Saved in favorites
Similar items by person
-
Blomgren-Hansen, Niels, (1989)
-
The economics of union cartelization
Blomgren-Hansen, Niels, (1998)
-
Prisdiskrimination og effektiv samfundsmæssig ressourceanvendelse
Blomgren-Hansen, Niels, (1998)
- More ...