Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22734
Authors: 
Schirwitz, Beate
Dittrich, Marcus
Year of Publication: 
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
unions
dual labour market
endogenous outside option
endogenous membership
JEL: 
C61
C78
J51
Document Type: 
Working Paper

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