Munich Personal RePEc Archive

Trade Union Priorities and Wage Rigidity

Drakopoulos, Stavros A. (1994): Trade Union Priorities and Wage Rigidity. Published in: Labour , Vol. 8, No. 3 (1994): pp. 567-580.

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The starting point of the paper is that trade unions engage in substitution once certain targets have been met. This implies that a priority-based or hierarchical model might be a better approximation to union behaviour. This model requires a two-part union utility function which changes when a satisfactory (or target) level of the priority variable (e.g. the wage rate) is met. After demonstrating the workings of such a model in a monopoly union framework, it is shown that when the wage is below the target level, there is real wage rigidity. Employment increases only when the target wage has been achieved

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