Convergent and divergent country trends in coordinated wage setting and collective bargaining in the public hospitals sector

Drawing on the findings of research in the public hospitals sector in five European countries 1 —France, Germany, the Netherlands, Norway and the UK—this article assesses the character of change in wage setting and collective bargaining. It demonstrates the diversity of national arrangements by comparing key characteristics: (i) the bodies of collective representation (unions, professional associations and employer bodies); (ii) the degree of integration with the wider public sector framework; (iii) coordination (or competition) with the private hospitals sector; and (iv) the practice of à la carte provisions within individual hospitals. Despite national varieties of wage setting and collective bargaining, each country sector faces similar tensions—most notably the opposition between public (labour market) rules and health (product market) rules, and pressures to segment or integrate employment conditions by labour force group. By examining the nature of change in institutions for wage setting and collective bargaining in each country, the article contributes to our understanding of the extent of coordination and change of public sector wage setting and describes three scenarios: fragmentation (Germany); continuity (France and the Netherlands); and reconstruction (the UK and Norway).     

Europeanization or globalization? Transnational wage bargaining and the distribution of activity in European labor markets

This paper investigates the impact of globalization on labor markets, in terms of wage inflation and the distribution of activity across regions. Specifically, we study the effects of aggregation in the labor markets on the distribution of employment and inflation pressures, where there are differences in market structures and transmission mechanisms underpinned by relatively immobile labor. To demonstrate these ideas, we take the European experience as a “laboratory” to show what can be expected from globalization in the labor markets in practice. Using models of wage leadership vs. locational competition, we examine the extent and strength of aggregation effects on labor market costs using a sample of data from 1983 to 2007 which covers the period of the creation of the Euro. We find that the aggregation effect has decreased significantly since the start of EMU, improving the trade-off between inflation and unemployment. At the same time, while Germany played an important role in the run-up to EMU in terms of wage leader, its role has now decreased and been replaced by globalization forces. This implies increased locational competition in terms of wage formation. We demonstrate this with the emerging role of the US as the benchmark for wage setting in Europe.     

The efficiency of training and hiring with intrafirm bargaining

This paper demonstrates that firms hire and train workers efficiently in a matching and intrafirm bargaining economy when the Hosios condition holds and returns to scale are constant. This conclusion stands in contrast to the prevailing view that training costs are a source of inefficiency in imperfect labor markets. The efficiency of the competitive economy relies on the ability of large firms to take into account the negative impact of the training rate on the wages negotiated inside the firm through intrafirm bargaining: untrained workers accept a wage reduction in compensation for potential training that is accessible only following employment. This intrafirm bargaining process solves efficiency problems associated with training costs that would otherwise lead to inefficient hiring and training decisions. This conclusion holds true for both specific and general human capital.     

Accounting for change in public sector industrial relations: the erosion of national bargaining in further education in England and Wales

The recent transformation of industrial relations in further education in England and Wales is examined, in particular the role of the national ‘Silver Book’ dispute over lecturers’ conditions of service in causing the erosion of national bargaining in the sector. The experience of further education points to the limits of the strategic choice approach as a device for explaining change in public sector industrial relations and to the importance of supplementing it with a perspective that emphasises the role of power.     

The practice of collective bargaining in the private sector in Quebec (Canada): the changing ‘rules of the game’

Drawing on 45 semi‐structured interviews with union negotiators active in the Quebec private sector, this article shows that local bargaining practices, despite their plurality, have tended to change following major trends. It also reveals, more fundamentally, a redefinition of the ‘rules of the game’. The transformation and stability of these social rules, which are much more focused on the needs of employers, have tended to weaken collective bargaining as a tool for industrial democracy.     

The role of the list price in housing markets: Theory and an econometric model

Houses are routinely sold at prices below, but rarely sold at prices above, their list prices. List prices appear to be price ceilings that preclude the possibility of sales at higher prices. This paper presents a theory of sellers' behaviour that explains why there are list prices in housing markets and why list prices are distinct from sellers' reservation prices. The theory forms the basis of an econometric model that has been estimated using data from the Baltimore, MD, area. The estimated model predicts sale and reservation prices conditional on list prices. The predictions of sale prices are considerably more accurate than those obtained from a standard hedonic price regression. The estimated model also explains why sellers may not be willing to reduce their list prices even after their houses have remained unsold for long periods of time.     

The cost of strikes in the Spanish mining sector: modelling an undesirable input with a distance function

In some contexts, firms have to deal with certain elements or factors that affect the production outcome but which are non-market in nature and therefore do not have a price. In this paper we propose a new use of a production economics tool, the input distance function, to empirically measure the effects of these factors. Although we suggest a general use of this methodology, it has been developed in the context of measuring the effects of labor disputes in a particular declining industry, that of Spanish coal mining. We have estimated an equation system comprising an input distance function and cost share equations to calculate the cost generated by strikes.

The influence of seller learning and time constraints on sequential bargaining in an artificial perishable goods market

This paper investigates the formation of prices in a perishable goods market where agents bargain repeatedly through pair-wise interactions. After extensive field observations, we chose to focus on two aspects that seem important to actors of this market: the passage of time and update in judgement when gathering information. The main feature of the market is that a seller bargaining with a buyer has incomplete information about buyer's willingness to pay and is not sure how her trading partner will evaluate an offer or compare it with other options. On the other hand, buyers have limited time to look for goods and cannot meet all possible sellers before making a decision. Hence agents cannot calculate the best price to offer but receive information through limited interactions, and use this information to choose their actions.An agent-based model was built to represent a framework that mimics the observed market institution and where agent's possible behaviors and learning was made as consistent as possible with gathered data. Simulations were run, first for sensitivity analysis concerning main parameters, then to test the dependance of agents’ learning to (a) the time buyers can spend on the market and (b) the frequency of update in learning by sellers. To validate the model, features produced by the simulated market are compared to the stylized facts gathered for negotiation about four goods. We reproduce the main features of the data on the dynamics of offers, transaction prices and agents’ behavior during the bargaining phases.     

Estimation of a simultaneous equations model with an ordinal endogenous variable: The extent of teacher bargaining and the state legal environment

This paper presents a simple two-step estimator for a simultaneous equations model that contains an ordinal endogenous variable. The estimation rules are extensions of the Heckman (1978) estimators, also considered by Amemiya (1978). Asymptotic covariance matrices of the estimators also are derived. The estimator is applied to an economic model in which the statewide extent of teacher bargaining and teacherbargaining legislation are determined jointly.     

Epidemics,labour markets and unemployment: the impact of SARS on human resource management in the Hong Kong service sector

This article examines the links between epidemics and their economic consequences, specifically in terms of their impacts on labour markets and jobs. To exemplify the above, we examine the effects of SARS (Severe Acute Respiratory Syndrome) on the Hong Kong economy, its labour market and its level of employment and unemployment. The article hypothesizes that the greatest impact would be on human resource management (HRM) in the service industries and on particular sub-sectors, such as the hotel sector. It concludes that the dramatic demand and supply ‘shocks’ significantly affected both the demand for and the supply of labour in the sector, with discernible HRM consequences.     

The impact of margins in futures markets: evidence from the gold and silver markets

This paper investigates the impact of margin requirements on the trading activity in the gold and silver futures markets. We extend prior research in at least two ways. First, we examine the role of time to contract-expiration in the relationship between margin levels and trading activity. We make the case that such an examination will reveal the nature of the costs that margins impose on futures traders. Second, we examine the impact margins have on the makeup of traders in futures markets. The evidence indicates that trading activity becomes more sensitive to margin changes as one gets closer to contract maturity, consistent with the notion that margins impose important transaction (rather than opportunity) costs on futures traders. Further to this evidence, we find that speculators and small traders, typically illiquid, are especially sensitive to margins. The data also indicate that margins are likely to be hiked following periods of increased volatility, and reduced following periods of relative stability, suggesting that margin alterations primarily serve as insurance to the futures exchanges.     

Corporate merger and collective bargaining in the UK

Corporate merger since the war has transformed the private sector of the economy in Britain. This has had significant effects on collective bargaining arrangements and outcomes. In this article the authors review these effects and consider their implications for trade union organisation.     

Reject and renegotiate: The Shapley value in multilateral bargaining

This paper investigates three distinctive and intuitive renegotiation bargaining protocols that all yield the Shapley value as the unique subgame perfect equilibrium outcome. These protocols, built on the multi-bidding procedure of Pérez-Castrillo and Wettstein (2001), allow more freedom in multilateral bargaining where rejected players can further negotiate and form coalitions. The self-duality of the Shapley value plays a key role in the second and third results. Moreover, these renegotiation protocols allow an actual play along the equilibrium path to restore the Shapley value in case of a ‘mistake’ made before.     

The no-arbitrage condition and financial markets with heterogeneous information

This paper examines the role of the no-arbitrage condition in financial markets with heterogeneous expectations. We consider a single-period, state-contingent claims model, withM risky securities andS states. There exist two types of heterogeneously informed investors, where the information heterogeneity is defined with respect to either the security payoff matrix, the state probability vector, or state partitions. When the information heterogeneity is defined with respect to either the security payoff matrix or state partitions, the no-arbitrage condition imposes a constraint on the dispersion of information between informed and uninformed investors. Further, the no-arbitrage condition is useful in ascertaining the patterns of heterogeneity among investors that are consistent with equilibrium. However, when the information heterogeneity is defined with respect to state probabilities, the role of the no-arbitrage condition is severely restricted. Finally, the no-arbitrage condition may have important implications for the (necessary and sufficient) conditions for the existence of an equilibrium price vector in financial markets with heterogeneous expectations.     

The Walras core of an economy and its limit theorem

The Walras core of an economy is the set of allocations that are attainable for the consumers when their trades are constrained to be based on some agreed price system, such that no alternative price system exists for any sub-coalition that allows all members to trade to something better. As compared with the Edgeworth core, both coalitional improvements and being a candidate allocation for the Walras core become harder. The Walras core may even contain allocations that violate the usual Pareto efficiency. Nevertheless, the competitive allocations are the same under the two theories, and the equal-treatment Walras core allocations converge under general conditions to the competitive allocations in the process of replication.     

Adaptive learning and distributional dynamics in an incomplete markets model

Recent research shows that several DSGE models provide a closer fit to the data under adaptive learning. This paper extends this research by introducing adaptive learning in the model of Krusell and Smith (1998) with uninsurable idiosyncratic risks and aggregate uncertainty. A first contribution of this paper establishes that the equilibrium of this framework is stable under least-squares learning. The second contribution consists of showing that bounded rationality enhances the ability of this model to match the distribution of income in the US. Learning increases significantly the Gini coefficients because of the opposite effects on consumption of the capital-rich and of the capital-poor agent. The third contribution is an empirical exercise that shows that learning can account for increases in the income Gini coefficient of up to 25% in a period of 28 years. Overall, these findings suggest that adaptive learning has important distributional repercussions in this class of models.