Optimum organization of the labor market in a small open economy

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Optimum organization of the labor market in a small open economy

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dc.contributor.author Blomgren-Hansen, Niels en_US
dc.date.accessioned 2009-02-04T10:27:49Z
dc.date.available 2009-02-04T10:27:49Z
dc.date.issued 2008-11-14T00:00:00Z en_US
dc.identifier.uri http://hdl.handle.net/10398/7599
dc.description.abstract In most countries labor is organzed in cooperating skill-speci c unions rather than in industrial unions or separately bargaining skill-speci c unions. Within an extremely simple model of a small open economy facing imperfect competition we show that this way of organizing labor can be explained as the outcome of rational (optimizing) behavior on the part of the unions and the employers. Organizing labor in local industrial cartels (regardless of skill) or a single economy wide cartel results in a real wage level that is inappropriately low both from the point of view of labor and the society as a whole unless labor has close to monopoly power in the wage setting process. Organizing labor in local or economy wide skill-speci c unions may result in a wage level that is too high. In addition, a labor market organized in non-cooperating unions is likely to be unstable. This dilemma calls for a compromise: A cartel of cooperating, independent skill-speci c unions. The degree and the form of the cooperation depend inter alia on the bargaining power of the employer, the number of skills and competing rms and the rigidity with which the unions enforce lines of demarcations. en_US
dc.format.extent 29 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2008-03 en_US
dc.title Optimum organization of the labor market in a small open economy en_US
dc.type wp en_US
dc.accessionstatus modt08nov14 nijemo en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Økonomisk Institut en_US
dc.contributor.departmentshort ECON en_US
dc.contributor.departmentuk Department of Economics en_US
dc.contributor.departmentukshort ECON en_US
dc.idnumber x656557183 en_US
dc.publisher.city København en_US
dc.publisher.year 2008 en_US


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