The Economics of First-Contract Mediation

16 Pages Posted: 23 Aug 2013

See all articles by Sabien Dobbelaere

Sabien Dobbelaere

Vrije Universiteit Amsterdam - Department of Economics; Tinbergen Institute; IZA Institute of Labor Economics

Roland Iwan Luttens

Ghent University - Department of Social Economics

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Abstract

This paper provides an economic foundation for non-binding mediation to stimulate first collective bargaining agreements, as implemented in British Columbia since 1993. We show that the outcome of first-contract mediation is Pareto efficient and proves immune to the insider-outsider problem of underhiring. We also demonstrate that equilibrium wages and profits under mediation coincide with the Owen values of the corresponding cooperative game with the coalitional structure that follows from unionization.

Keywords: BC first-contract model, mediation, collective bargaining, union, non-binding contract

JEL Classification: C71, J51, L20, K12

Suggested Citation

Dobbelaere, Sabien and Luttens, Roland Iwan, The Economics of First-Contract Mediation. IZA Discussion Paper No. 7541. Available at SSRN: https://ssrn.com/abstract=2314836

Sabien Dobbelaere (Contact Author)

Vrije Universiteit Amsterdam - Department of Economics ( email )

De Boelelaan 1105
NL- Amsterdam, NL-1081 HV
Netherlands
0031 20 598 28 74 (Phone)

Tinbergen Institute

Keizersgracht 482
NL- Amsterdam, NL-1017 EG
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
D- Bonn, 53072
Germany

Roland Iwan Luttens

Ghent University - Department of Social Economics ( email )

Hoveniersberg 24
Gent, 9000
Belgium

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