We present an applied general equilibrium modelling approach to analyse employment and unemployment effects of labour tax cuts in an economy where wages are determined through firm-union bargaining at the sectoral level. In such a labour market regime, simulations for Germany show that labour...

In Germany, trade unions and employers associations play a role not only in wage determination but also in social affairs and labour law. While the majority of firms are organized in employers associations, less than one quarter of employees are members of a trade union. Both social partners...