Trade Union Priorities and Wage Rigidity

Stavros Drakopoulos

MPRA Paper from University Library of Munich, Germany

Abstract: The starting point of the paper is that trade unions engage in substitution once certain targets have been met. This implies that a priority-based or hierarchical model might be a better approximation to union behaviour. This model requires a two-part union utility function which changes when a satisfactory (or target) level of the priority variable (e.g. the wage rate) is met. After demonstrating the workings of such a model in a monopoly union framework, it is shown that when the wage is below the target level, there is real wage rigidity. Employment increases only when the target wage has been achieved

Keywords: Trade Unions; Wages (search for similar items in EconPapers)
JEL-codes: D70 J51 (search for similar items in EconPapers)
Date: 1994-05
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Published in Labour 3.8(1994): pp. 567-580

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:35791

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