In the context of international bargaining, standard models predict that a shift in military power can cause preventive war because it changes the relative bargaining position between states. We find that shifts in military power are not the only cause of war under commitment problems and that...

Do the parties in a typical dispute face incentives similar to those in the classic prisoner's dilemma game? In this paper, we explore whether the costs and benefits of legal representation are such that each party seeks legal representation in the hope of exploiting the other party, while...

We present a model where divorcing spouses can choose to hire lawyers in their divorce process. Spouses encounter incentives as in the classical prisoners' dilemma: Despite the zero sum nature of the game and the lawyers' fees, each spouse has an incentive to hire a lawyer. We propose a simple...

Collective bargaining in Germany takes place either at the industry level or at the firm level; collective bargaining coverage is much higher than union density; and not all employees in a covered firm are necessarily covered. This institutional setup suggests to explicitly distinguish union...

A strike insurance is integrated into a model based on one-sided private information of the firm. It is shown that the strike insurance will increase the dispute level if payments to the insurance are lump-sum or if payments from the insurance are proportional to wages. However, if wages affect...

This paper investigates the increase in wage inequality, the decline in collective bargaining, and the development of the gender wage gap in West Germany between 2001 and 2006. Based on detailed linked employer-employee data, we show that wage inequality is rising strongly – driven not only by...

Common wisdom holds that the introduction of a non-binding minimum wage is irrelevant for actual wages and employment. Empirical and experimental research, however, has shown that the introduction of a minimum wage can raise even those wages that were already above the new minimum wage. In this...

This paper provides estimates of the union wage gap in Portugal, a nation until recently lacking independent data on union density at firm level. Having estimated nonlinear and linear estimates of the effect of union density on the wage gap, the next stage of the analysis seeks to account for...

Contrary to previous literature we hypothesize that interests of labor may well - like that of shareholders - aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation...

A large number of articles have analysed 'the one constant' in the economic effects of trade unions, namely that union bargaining reduces employment growth by two to four percentage points per year. Evidence is, however, mostly related to Anglo-Saxon countries. We investigate whether a different...