A Cartel Analysis of the German Labor Institutions and its Implications for Labor Market Reforms

19 Pages Posted: 28 Jan 2008

See all articles by Justus Haucap

Justus Haucap

Heinrich Heine University Dusseldorf - Department of Economics; German Institute for Economic Research (DIW Berlin)

Uwe Pauly

affiliation not provided to SSRN

Christian Wey

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE)

Date Written: May 2007

Abstract

This paper offers a cartel explanation for the stability of German collective bargaining institutions.We show that a dense net of legal safeguards has been yarned around the wage setting cartel. These measures make deviation by cartel insiders less attractive and simultaneously erect entry barriers for alternative unions. As we argue many recent labor policy measures, which make wages more flexible, serve to further stabilize the labor cartel, while truly pro-competitive proposals have not been implemented exactly because of their destabilizing effects.We propose policy measures that remove entry barriers and facilitate outside competition by alternative collective bargaining organizations.

Keywords: Labor market cartel, labor market institutions, collective bargaining

JEL Classification: J52, K31, L12

Suggested Citation

Haucap, Justus and Pauly, Uwe and Wey, Christian, A Cartel Analysis of the German Labor Institutions and its Implications for Labor Market Reforms (May 2007). Ruhr Economic Paper No. 9. Available at SSRN: https://ssrn.com/abstract=989972 or http://dx.doi.org/10.2139/ssrn.989972

Justus Haucap (Contact Author)

Heinrich Heine University Dusseldorf - Department of Economics ( email )

Duesseldorf
Germany

HOME PAGE: http://www.dice.uni-duesseldorf.de

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Uwe Pauly

affiliation not provided to SSRN

Christian Wey

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany
+49-211-81-15009 (Phone)
+49-211-81-15499 (Fax)

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