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ResearchPaper
2012
Fairness considerations in labor union wage setting : a theoretical analysis
Fairness considerations in labor union wage setting : a theoretical analysis
Abstract (English)
We consider a theoretical model in which unions not only take the outside option into account, but also base their wage-setting decisions on an internal reference, called the fairness reference. Wage and employment outcomes and the shape of the aggregate wagesetting curve depend on the weight and the size of the fairness reference relative to the outside option. If the fairness reference is relatively high compared to the outside option, higher wages and lower employment than in the standard model will prevail. If hit by an adverse technology shock, the economy will then react with a stronger downward adjustment in employment, whereas real wages are more rigid than in the standard model. With a low fairness reference the opposite results are obtained. An increase in the fairness weight amplifies the deviations of wages and employment from those of the standard model. It also leads to an increase in the degree of real wage rigidity if the fairness reference is high and an increase in the degree of real wage flexibility if the fairness reference is low. Thus, higher wages go hand in hand with more pronounced wage stickiness.
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Notes
Publication license
Publication series
FZID discussion papers; 56
Published in
Faculty
State Institutes
Faculty of Business, Economics and Social Sciences
Faculty of Business, Economics and Social Sciences
Institute
Forschungszentrum Innovation und Dienstleistung
Institute of Economics
Institute of Economics
Examination date
Supervisor
Edition / version
Citation
Identification
DOI
ISSN
ISBN
Language
English
Publisher
Publisher place
Classification (DDC)
330 Economics
Original object
Standardized keywords (GND)
Sustainable Development Goals
BibTeX
@techreport{Strifler2012,
url = {https://hohpublica.uni-hohenheim.de/handle/123456789/5622},
author = {Strifler, Matthias and Beißinger, Thomas},
title = {Fairness considerations in labor union wage setting : a theoretical analysis},
year = {2012},
school = {Universität Hohenheim},
series = {FZID discussion papers},
}