Gradual Collective Wage Bargaining
Tinbergen Institute Discussion Paper 16-004/V
16 Pages Posted: 22 Jan 2016
Date Written: January 22, 2016
This paper presents an alternative implementation of firm-level collective wage bargaining, where bargaining proceeds as a finite sequence of sessions between a firm and a union of variable size. We investigate the impact of such a 'gradual' union on the wage-employment contract in an economy with concave production. In a static framework, the resulting equilibrium is equivalent to the efficient bargaining outcome. In a dynamic framework with search frictions, we demonstrate that gradual collective wage bargaining coincides with all-or-nothing bargaining when bargaining takes place in fictitious time before production.
Keywords: collective bargaining, gradual union, firm, search frictions, employment-at-will
JEL Classification: J30, J41, J51
Suggested Citation: Suggested Citation