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Title:A Dynamic Model of Union Behaviour. The Role of an Endogenous Outside Option and Bargaining Centralisation PDF Logo
Authors:Schirwitz, Beate
Dittrich, Marcus
Issue Date:2006
Series/Report no.:Dresden discussion paper in economics 07/06
Abstract:We analyse the role of bargaining centralisation when both the union's outside option and union membership are endogenous and considered in a dynamic framework. A dynamic two-sector model is developed where the wage rate in the first sector is either set by a monopoly union or is the result of efficient bargaining between union and firm. The union's outside option is employment in the second, competitive sector. We extend the dynamic analysis by modelling the outside option as endogenous and show that dynamic models may also overstate employment distortions in this case if bargaining is conducted on a highly centralised stage. Additionally, we offer reflexions along the optimisation process in different scenarios and a comparative static analysis, thus presenting some new general insights into the topic.
Subjects:Dynamic wage bargaining
dual labour market
endogenous outside option
endogenous membership
Document Type:Working Paper
Appears in Collections:Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden

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