Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33563
Authors: 
FitzRoy, Felix R.
Nolan, Michael
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1760
Abstract: 
Job-satisfaction as a component of workers' utility has been strangely neglected, with work usually regarded as reducing utility and the benefits of leisure. This is contradicted by many empirical studies showing that unemployment is a major cause of unhappiness, even when income is controlled for. Here we develop a simple model where job-satisfaction is non-contractible but can be included in extended collective bargaining when workers participate in management, but employment is still chosen to maximise profit. Including taxation to fund unemployment benefits and public goods, we show that switching from traditional bargaining over wages to extended (but still second-best) bargaining can generate a Pareto welfare improvement.
Subjects: 
job-satisfaction
bargaining
unemployment
JEL: 
J28
J52
J65
Document Type: 
Working Paper

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