TAXES ON PAYROLL, REVENUES AND PROFITS IN THREE MODELS OF COLLECTIVE BARGAINING

Variations in company taxes are analysed for a right-to-manage model, an efficient bargaining setting and a seniority approach. Taxes cannot be shifted forward by the risk-neutral firm. Alternative income and bargaining power are allowed to vary with taxes. Employing asymmetric Nash solution it is found that changes in a payroll, revenue or profit tax can have differing implications for labour demand curve models and efficient bargaining solutions. This distinction might provide a novel basis for empirical work. Variations in bargaining power and-within a labour demand curve setting-the union's objective function do not change results.     

The Determinants of Relative Wage Change in Australia

This article uses data from 3500 Australian workers to investigate which factors have had a significant influence on microeconomic wage growth over the years 1997 to 2000. The relative importance of four types of factors—outside incomes, demand for labour, workers' relative bargaining strength and category of wage contract—are compared. Basic individual demographic characteristics and some indicators of workers' bargaining power provided most of the explanation for wage changes. Proxy variables for labour demand, while significant and correctly signed, were small in magnitude.     

Efficient bargaining versus right to manage: A stability analysis in a Cournot duopoly with trade unions

The present study considers a unionised (nonlinear) duopoly with two different labour market institutions, i.e. efficient bargaining (EB) and right to manage (RTM), to analyse product market stability under quantity competition with trade unions. We show that when the preference of unions towards wages is small, (i) the parametric stability region under RTM is higher than under EB, and (ii) a rise in the union power in the Nash bargaining played between firms and unions monotonically increases (resp. reduces) the parametric stability region under RTM (resp. EB). In contrast, when the preference of unions becomes larger, an increase in the union's bargaining power acts: (1) as an economic stabiliser when the union power is small; (2) as an economic de-stabiliser when the union power is high. In addition to established results with regard to equilibrium outcomes, our findings shed some light on the effects of how the labour market regulation affects out-of-equilibrium behaviours in a Cournot duopoly.     

Labor taxation, public finance, and wage determination: evidence from OECD countries

This paper analyzes the relationship between unemployment, average effective labour tax rates and public spending in 17 OECD countries. The focus is on the degree of centralization and cooperation in wage setting. Estimation results from a dynamic time-series-cross-section model suggest that the countries where wage setting takes place at the firm level have used labour taxes less extensively in financing welfare spending, compared to countries with centralized or decentralized bargaining. This is consistent with another finding, according to which labour taxes distort the labour demand the least in the countries with firm level bargaining.     

Macroeconomic outcomes,collective bargaining and intersectoral productivity differentials: a panel approach

Using a sample of 19 advanced countries from 1990 to 2014 and an Arellano–Bover/Blundell–Bond linear dynamic GMM estimator along with a bootstrap-based bias correction fixed effects estimator for dynamic panels, the paper examines the macroeconomic impact of collective bargaining structures in a context of varying intersectoral heterogeneity in productivity growth among the exposed and sheltered sectors of the economy. Results show a dampening impact of pattern and centralized bargaining structures on unemployment. However, strong domestic demand is a key precondition for such a favourable effect to materialize. Uncoordinated and centralized bargaining structures are the most efficient in terms of labour cost restraint while industry bargaining moderates labour cost growth as intersectoral productivity differentials widen.     

Profit Sharing,Credit Market Imperfections and Equilibrium Unemployment*

We investigate the interaction between labour and credit market imperfections for equilibrium unemployment in the presence of profit sharing. In a partial equilibrium with exogenous outside options, increased bargaining power of banks has adverse employment effects. In a general equilibrium with endogenous outside options, this relationship is frequently reversed; reduced credit market imperfections increase equilibrium unemployment if the labour market imperfections—measured by the bargaining power of trade unions—are sufficiently strong and the benefit–replacement ratio is sufficiently high. Finally, we show that higher bankruptcy risks increase equilibrium unemployment under similar conditions.     

ENVIRONMENTAL POLICY AND LABOUR MARKET IMPERFECTION

This paper will set up a general equilibrium model with a distorted labour market to explore the effects of an environmental tax and union bargaining power on formal employment and the informal competitive wage. We find that when the government raises the environmental tax, both formal employment and informal competitive wage would fall. In addition, we confirm that a policy of labour market reform would increase both formal employment and the informal competitive wage.     

Labour Market Policies and Long-term Unemployment in a Flow Model of the Australian Labour Market

This paper develops a general equilibrium job matching model, which is used to assess the impact of active labour market policies, reductions in unemployment benefits and reductions in worker bargaining power on long-term unemployment and other key macro variables. The model is calibrated using Australian data. Simulation experiments are conducted through impulse response analysis. The simulations suggest that active labour market programs (ALMPs) targeted at the long-term unemployed have a small net impact and produce adverse spillover effects on short-term unemployment. Reducing the level of unemployment benefits relative to wages and worker bargaining power have more substantial effects on total and long-term unemployment and none of the spillover effects of ALMPs.     

UNION–FIRM BARGAINING AGENDA REVISITED: WHEN UNIONS HAVE DISTINCT PREFERENCES

In this paper we revisit the issue of the scope of bargaining between firms and unions by considering a more general union's utility function with distinct preferences and sequential negotiations. First, we compare exogenously given labour market institutions; i.e., right‐to‐manage (RTM) and sequential efficient bargaining (SEB). We show that the conventional wisdom, which states that firms always prefer RTM, no longer holds. In fact, when unions are adequately wage aggressive and have strong enough bargaining power, firms may prefer SEB negotiations; however, firms switch their preference to RTM when unions are very strong. Moreover, we show that a conflict of interest between the parties may emerge when unions are sufficiently employment oriented as well as sufficiently wage aggressive and not too strong or too weak in bargaining. Second, we analyse the endogenous choice of the bargaining agenda. We show that a rich plethora of equilibria may occur and new situations of conflict/agreement of interests between the bargaining parties arise in particular when unions are sufficiently wage‐aggressive.     

Shocks and rigidities as determinants of CEE labour markets’ performance

In this article, the impact of real wage, productivity, labour demand and supply shocks on eight Central and Eastern European (CEE) economies from 1996–2007 is analysed with a panel structural vector error correction model. A set of long‐run restrictions derived from the dynamic stochastic general equilibrium (DSGE) model is used to identify structural shocks, and fluctuations in foreign demand are controlled for. We find that the propagation of shocks on CEE labour markets resembles that found for OECD countries. Labour demand shocks emerge as the main determinant of employment and unemployment variability in the short‐to‐medium run, but wage rigidities were equally important for observed labour market performance, especially in Poland, Czech Republic and Lithuania. We associate these rigidities with collective bargaining, minimum wage, active labour market policies and employment protection legislation.     

Insider power and wage setting in transition: Evidence from a panel of large Polish firms, 1988–1994

We analyse wage setting behaviour in the period of transition using the `right to manage model'. The results show a significant change in wage bargaining in 1990. However, the insider power, measured by the employees' capacity to capture productivity gains, persists. The sensitivity of wages to productivity changes is much stronger on the upside than on the downside. In SOEs insiders capture important part of labour productivity gains. In firms transformed into Treasury owned joint stock companies insider effect is weaker. In privatised firms, the bargaining power of the employees is too weak to let them push up wages in response to labour productivity growth. These results are robust to the potential selection bias.     

WHY IS JAPANESE WORKING TIME SO LONG?: WAGE-WORKING TIME CONTRACT MODELS*

Wage-working time contract models are used to analyse factors which can account for the long working hours of Japanese males. Although there are many factors which affect working time, our simulation shows that the clear gender division of labour in Japanese households is the most important. The simulation also shows that the wage gap and working time gap between large and small companies are explained mainly by the difference in the company's monopoly power, the worker's ability and the union's bargaining power. Moreover, if working time is not a bargaining issue and is determined by employers, it is longer than the case where it is a bargaining issue.     

Bargaining power and firm profits in asymmetric duopoly: an inverted-U relationship

This paper investigates the effects of bargaining power on downstream firms’ profits. Consider a vertically related industry consisting of one upstream and two downstream firms, the latter having different marginal costs. Each pair bargains over a linear wholesale price, and then the downstream firms engage in Cournot competition. We show that the inefficient downstream firm may benefit from an increase in the bargaining power of the upstream firm. Furthermore, we obtain similar results when each downstream firm trades with its exclusive upstream agent, under non-linear demand function, or when downstream firms compete in price.     

WHO’S THE BOSS? HOUSEHOLD DISTRIBUTION OF POWER IN A NON‐COOPERATIVE FRAMEWORK

When labour market participation influences bargaining power in a household, the male and the female labour supplies can be either positively or negatively related. If negatively related, possibilities include: ‘balance of power’, the complete dominance of one member, and circumstances where inequity persists with incomplete dominance. If effort levels are positively sloped, it is possible to have equilibrium at either high or low effort levels leading to equity. The effects of economic development and wage discrimination are also discussed.     

The invoicing currency choice model of export enterprises assuming joint utility maximization and analysis of the factors influencing selection

Based on the assumption of joint utility maximization, an exporting currency unit pricing model was established, which consists of the local currency, producer's currency, and vehicle currency. Furthermore, Monte Carlo simulation and partial least squares (PLS) regression were used to analyze currency weights. Results suggest that when a producer's currency is devalued relative to a local currency, if the demand elasticity of the importer is large, the local currency will primarily be used; if the bargaining power of the importer is strong, the producer's currency will primarily be used. Among these factors, the bargaining power of the exporter has the greatest influence, followed by the demand elasticity of the importer and the exporting country's exchange rate.     

INDUSTRIAL RELATIONS AND ECONOMIC GROWTH IN KOREA

The wage rate, labour productivity, and labour share are examined as they relate to changing industrial relations over the last four decades in the Korea. The results imply that the labour share is greater than that of Korea's competitive equilibrium in the 1990s. We analyse the effect of industrial relations on economic growth through a theoretical model comparing the growth rate of the competitive equilibrium with that of the bargaining equilibrium. The bargaining growth rate is lower than that of the competitive equilibrium. Among bargaining equilibria, the growth rate decreases as the labour share increases.     

SUPPLIER INNOVATION IN THE PRESENCE OF BUYER POWER

This article analyzes the impact of retailer buyer power on a supplier's incentive to conduct innovation, with a focus on the supplier's investment in product variety and quality improvement. The analysis shows that an increase in buyer power, manifested through either a weakening of the supplier's bargaining position or a strengthening of a large retailer's bargaining power, leads to greater product variety and higher quality if the elasticity of demand is not too large. Increased buyer power, manifested through a strengthening of a large retailer's bargaining position, stimulates the supplier to invest more in quality improvement.     

R&D INVESTMENTS AND SEQUENTIAL WAGE NEGOTIATIONS*

This paper analyses how the structure of wage bargaining affects R&D investment by firms that increases the productivity of labour in a Cournot duopoly. We find that total expenditure on R&D is greater when wages are set simultaneously than when they are set sequentially. Thus sequential wage negotiations reduce the incentive for firms to innovate and affect the productivity of labour. When wage negotiations are sequential the productivity of labour is greater (lower) in the follower (leader) firm than when negotiations are simultaneous. We also obtain that for same parameter values it is possible for the firm with the lower productivity to end up paying a higher wage than the firm with the higher level of labour productivity.     

Bargaining with Imperfect Commitment

We study the effect of imperfect commitment in noncooperative two-person bargaining games. By establishing the reputation for being stubborn, a player sometimes commits to her initial demand, becoming unable to change her demands or to accept an inferior offer from her opponent. When the probability of being stubborn is small, the set of equilibria is shown to be small and agreement may be reached immediately despite the possibility of stubbornness. A player has greater bargaining power when she is more patient and/or is more likely to be stubborn. Journal of Economic Literature Classification Number: C78.