Please use this identifier to cite or link to this item:
Blomgren-Hansen, Niels
Year of Publication: 
Series/Report no.: 
Working paper No. 3-2008
Copenhagen Business School (CBS), Department of Economics, Frederiksberg
In most countries labor is organzed in cooperating skill-speci c unions rather than in industrial unions or separately bargaining skill-speci c unions. Within an extremely simple model of a small open economy facing imperfect competition we show that this way of organizing labor can be explained as the outcome of rational (optimizing) behavior on the part of the unions and the employers. Organizing labor in local industrial cartels (regardless of skill) or a single economy wide cartel results in a real wage level that is inappropriately low both from the point of view of labor and the society as a whole unless labor has close to monopoly power in the wage setting process. Organizing labor in local or economy wide skill-speci c unions may result in a wage level that is too high. In addition, a labor market organized in non-cooperating unions is likely to be unstable. This dilemma calls for a compromise: A cartel of cooperating, independent skill-speci c unions. The degree and the form of the cooperation depend inter alia on the bargaining power of the employer, the number of skills and competing rms and the rigidity with which the unions enforce lines of demarcations.
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.