Centralised Labour Market Negotiations

26 Pages Posted: 26 Nov 2013

See all articles by Julia Müller

Julia Müller

University of Muenster - School of Business & Economics

Thorsten Upmann

Helmholtz Institute for Functional Marine Biodiversity at the University of Oldenburg; Bielefeld University - Department of Business Administration and Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 25, 2013

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.

Keywords: central labour market negotiations, efficient bargains, Nash bargaining solution, involuntary unemployment, endogenous output price, Walrasian market clearing

JEL Classification: J510, J520, D410

Suggested Citation

Müller, Julia and Upmann, Thorsten, Centralised Labour Market Negotiations (November 25, 2013). CESifo Working Paper Series No. 4470, Available at SSRN: https://ssrn.com/abstract=2359384 or http://dx.doi.org/10.2139/ssrn.2359384

Julia Müller

University of Muenster - School of Business & Economics ( email )

Scharnhorststr. 100
Muenster, D-48151
Germany

Thorsten Upmann (Contact Author)

Helmholtz Institute for Functional Marine Biodiversity at the University of Oldenburg ( email )

Ammerländer Heerstraße 231
Oldenburg, 26129
Germany

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
D-33501 Bielefeld, NRW 33501
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
70
Abstract Views
1,324
Rank
594,428
PlumX Metrics