A macroeconomic model is developed in which the psychological concept of loss aversion is incorporated into workers' preferences. The impact of monetary policy in the presence of loss aversion depends on the specification of the reference wage. The plausible specification that a worker's...

This paper analyzes a trade union dominated by a sub-group of employed insiders who enjoy secure employment. From the analysis the bargained wage is shown to be positively related to the union power parameter and lay-off pay and negatively related to the degree of risk aversion of the employed...

This paper reviews the measurement of equilibrium unemployment in Australia using the Phillips curve. To provide a theoretical framework through which these measurement exercises can be understood, the theory of equilibrium unemployment based on wage bargaining is also described and reviewed....

Customer market analysis combined with trade-union wage setting is shown to yield a range of equilibrium levels of employment. Only when employment is forced outside this range can the disequilibrium acceleration or d eceleration of the price level be expected to operate. Numerical calc ulations...

The object of this paper is to develop a method by which trade-union power can be measured and by which the factors that influence the trade-union power can be identified. In the paper, two models of unions are compared--the insider-dominated union and the open union model. In both models, the...