Principal-agent models take outside options, determining participation and incentive constraints, as given. We construct a general equilibrium model where workers' reservation wages and the maximum punishment acceptable before workers quit are instead determined endogenously. We simultaneously...

The paper surveys unemployment policies for advanced market economies and evaluates them by examining the predictions of the underlying macroeconomic theories. The basic idea is that, for the most part, different unemployment policy prescriptions rest on different macroeconomic theories, and our...

The article tries to answer an old question of economic theory and institutional economics: How do trade unions fit into a market economy? Are they a constitutive element of the market order or: are they a source of irritation and disruption?

In this note, we apply a new test by Lind and Mehlum (2010), casting doubt on the claim proposed by Blanchflower (2007) that the probability of unionisation follows an inverted U-shaped pattern in age with a maximum in the mid- to late 40s. With this new test for an inverted U-shaped pattern,...

We study the descriptive and substantive representation of workers through worker representatives, focusing on the selection of German works council representatives and their impact on worker outcomes. Becoming a professional representative leads to substantial wage gains for the elected,...