The need for locational competition among labour markets arises when labour is immobile. At the same time market clearing under such conditions can lead to wage and income variability. In such cases demand for insurance against regional shocks arises, which can be provided by nationwide...

Existing theories of unions emphasize their impact on wage levels relative to the opportunity cost of leisure. This paper explores the possibility that monopoly unions provide income insurance against idiosyncratic wage variability. An optimal union contract is characterized by real wage and...

This paper analyzes some of the consequences of economic and monetary union of the two Germanies. Particular emphasis is given to the real implications for the supply side of the German Democratic Republic and for resource flows between two economic regions.