Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89759
Authors: 
Müller, Julia
Upmann, Thorsten
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4470
Abstract: 
This paper contributes to the analysis of central vs. decentral (firm-level) labour market negotiations. We argue that during negotiations on a central scale employers and employees plausibly take output market effects into account, while they behave competitively during firm-level negotiations. Assuming that in both cases the labour market conflict is settled efficiently according to the familiar Nash bargaining solution, we show that central negotiations lead to a lower employment level but to a higher wage rate, when compared with local labour market bargains. While this is an important theoretical result in its own, it has important effects for both empirical labour market research and labour market policies. Also, this result counters the critique that efficient negotiations result in employment levels exceeding the competitive level.
Subjects: 
central labour market negotiations
efficient bargains
Nash bargaining solution
involuntary unemployment
endogenous output price
Walrasian market clearing
JEL: 
J51
J52
D41
Document Type: 
Working Paper

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