Coordinating Unions, Wages and Employment

In this paper we consider a two-sector economy in which individual unions are affiliated into a federation of unions. We analyze the consequences of two different types of wage setting. Firstly, individual unions set wages in their own sector without taking into account the effect of their wages on the employment level in the other sector. There may be positive as well as negative externalities. A positive (negative) externality may exist if a higher (lower) wage in one sector implies a higher level of employment in the other sector. Both cases may occur in our model. Secondly, wages in the two sectors are set by the federation of unions. We show that in this case higher (lower) wages result than in the first case if a positive (negative) externality exists

Country characteristics and the incidence of capital income taxation on wages: an empirical assessment

This paper examines the incidence of corporate income taxes on wages using data from the US Bureau of Labor Statistics for 13 OECD countries. Within a wage-bargaining framework, our econometric analysis shows that a substantial share of the corporate tax burden is shifted from capital to labour. However, the magnitude of this shift is influenced importantly by country characteristics affecting the process of wage determination, such as the degree of capital mobility, a country's relative influence over the world price of output and trade unions’ strength

Firm heterogeneity and wages under different bargaining regimes : does a centralised union care for low-productivity firms?

This paper studies the relationship between wages and the degree of firm heterogeneity in a given industry under different wage setting structures. To derive testable hypotheses, we set up a theoretical model that analyses the sensitivity of wages to the variability in productivity conditions in a unionsised oligopoly framework. The model distinguishes centralised and decentralised wage determination. The theoretical results predict wages to be negatively associated with the degree of firm heterogeneity under centralised wage-setting, as unions internalise negative externalities of a wage increase for low-productivity firms. We test this prediction using a linked employeremployee panel data set from the German mining and manufacturing sector. Consistent with our hypotheses, the empirical results suggest that under industry-level bargaining workers in more heterogeneous sectors receive lower wages than workers in more homogeneous sectors. In contrast, the degree of firm heterogeneity is found to have no negative impact on wages in uncovered firms and under firm-level contracts

Market Work, Home Production, Consumer Demand and Unemployment among the Unskilled

We develop a general equilibrium model in which longer working time and higher labor force participation lead to a fall in unemployment. Longer working hours and higher labor force participation have two direct effects: People have higher incomes and less (leisure) time. This has implications for the composition of consumer demand, since people spend less time on home production. Instead, they outsource more domestic tasks to the market. Consumer demand shifts toward unskill-intensive goods. The relative demand for unskilled labor rises and unemployment falls. We provide empirical evidence for our theoretical predictions in several ways: We study the link between labor market participation, home production and the demand for household and similar services using the German time use survey conducted in 1991/92. In addition, we use panel data for 23 OECD countries between 1980 and 2003 to directly examine the link between labor force participation and the unemployment rate. The empirical results corroborate the predictions from the theoretical model

Social Models for Dealing with Inequalities

Production of INCASI Project H2020-MSCA-RISE-2015 GA 691004This chapter compares social models in Europe and Latin America. The goal is to study the interaction between two institutions: on the one hand, pre-distributive (ex ante) institutions, such as the structure and coverage of collective bargaining and, on the other hand, post-distributive (ex post) institutions, such as unemployment protection and social policy. Pre-distributive institutions are important for correcting inequalities in the labour market, because they introduce guidelines for egalitarian wage structures. Post-distributive institutions help to mitigate inequalities generated in the labour market. The methodology is based on statistical analysis of a series of indicators related to pre and post-distributive policies. The results present three types of model: (1) coordinated economies, typical of neo-corporatist Scandinavian countries; (2) mixed economies, typical of Mediterranean systems, and (3) uncoordinated economies, which equate to liberalism and the Latin American 'structural heterogeneity' model. It is neo-corporatist coordinated economies that generate the most pre and post-distributive equality. In turn, uncoordinated economies, and Latin American ones in particular, generate more inequalities due to highly informal employment and the weakness of their post-distributive institutions