This paper indicates that the extent of collective bargaining coverage in an industry may depend on the differences in firms productivity levels within the industry. Less pronounced differences in productivity levels make it easier to design collective wage contracts that are accepted by a wider...

We develop a quantitative framework in which income inequality arises endogenously in response to productivity shocks. The framework accommodates sectoral inputoutput linkages, arbitrary elasticities of factors and intermediates, and heterogeneous workers that endogenously choose to supply their...