According to the standard union bargaining model, unemployment benefits should have big effects on wages, but product-market prices and productivity should play no role in the wage bargain. We formulate an alternative strategic bargaining model, where labour and product-market conditions...

Using a panel of 250 Swedish municipalities over the period 1987-1996, we examine the direct displacement effects of active labour market programmes (ALMPs). Compared to earlier studies on this topic, we have more and better data. Based on our GMM estimations, we find that there are direct...

This paper deals with the employment effects of reduced working time when firms' endogenous response of overtime is considered. The anal ysis distinguishes between fixed and profit-maximizing levels of outp ut as well as between interior and corner solutions. It is shown that under plausible...

In a bargaining model, we show that a decrease in the unemployment benefit level increases not only equilibrium employment, but also nominal wage flexibility, and thus reduces employment variations in the case of nominal shocks. Long-term wage contracts lead to higher expected real wages and...