The Impact of Unionization Structures with Heterogeneous Firms and Rent‐Sharing Motives

28 Pages Posted: 28 Jan 2019

See all articles by Marco de Pinto

Marco de Pinto

University of Applied Labour Studies

Date Written: January 2019

Abstract

How are unemployment and output affected if wages are set on the sector level rather than firm level? We take a new look at this question, allowing for heterogeneous firms and rent‐sharing motives. Without these motives, employment and output are lower under sector‐level wage‐setting due to higher wage markups. With rent‐sharing motives, however, firm selection is higher under sector‐level wage‐setting, which tends to increase employment and output, thus counteracting the markup effect. Simulations show that the firm‐selection effect decreases the difference between the two unionization structures substantially but it does not change the signs of the effects on output and employment.

Keywords: Aggregate output, heterogeneous firms, rent‐sharing motives, unemployment, unionization structures

Suggested Citation

de Pinto, Marco, The Impact of Unionization Structures with Heterogeneous Firms and Rent‐Sharing Motives (January 2019). The Scandinavian Journal of Economics, Vol. 121, Issue 1, pp. 298-325, 2019, Available at SSRN: https://ssrn.com/abstract=3322812 or http://dx.doi.org/10.1111/sjoe.12268

Marco De Pinto (Contact Author)

University of Applied Labour Studies ( email )

Seckenheimer Landstr. 16
Mannheim, 68163
Germany

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