Delegation of wage determination is modelled as the transferral of decision‐making rights to better‐informed agents. The rank and file of trade unions has less information and can, therefore, benefit from delegation. However, delegation might be disadvantageous for union members, since delegates...

In an efficiency wage economy, lump-sum severance pay from which shirkers can be excluded raises employment. However, severance payments are usually related to wages. It is shown that earnings-related, mandated severance pay will have ambiguous employment effects if effort can be varied...