TY - JOUR
T1 - Monopolistic Competition and Different Wage Setting Systems
AU - García, José Ramón
AU - Sorolla, Valeri
PY - 2014/1/1
Y1 - 2014/1/1
N2 - In this paper, we present a disequilibrium unemployment model without labor market frictions and monopolistic competition in the goods market within an infinite horizon model of growth. We consider different wage setting systems and compare wages, the unemployment rate, and income per capita in the long-run at firm, sector, and national (centralized) levels. The aim of this paper is to determine under which conditions, the inverted-U hypothesis between unemployment and the degree of centralization of wage bargaining, reported by Calmfors and Driffill [Economic Policy, 6, 14-61, 1988], is confirmed. Our analysis shows that a high degree of market power normally produces the inverted-U shape for unemployment. Moreover, we also illustrate that this inverted-U shape can be reversed when the ability of trade unions to internalize the provision of social services is great enough at sector level. © 2013 Scottish Economic Society.
AB - In this paper, we present a disequilibrium unemployment model without labor market frictions and monopolistic competition in the goods market within an infinite horizon model of growth. We consider different wage setting systems and compare wages, the unemployment rate, and income per capita in the long-run at firm, sector, and national (centralized) levels. The aim of this paper is to determine under which conditions, the inverted-U hypothesis between unemployment and the degree of centralization of wage bargaining, reported by Calmfors and Driffill [Economic Policy, 6, 14-61, 1988], is confirmed. Our analysis shows that a high degree of market power normally produces the inverted-U shape for unemployment. Moreover, we also illustrate that this inverted-U shape can be reversed when the ability of trade unions to internalize the provision of social services is great enough at sector level. © 2013 Scottish Economic Society.
U2 - https://doi.org/10.1111/sjpe.12034
DO - https://doi.org/10.1111/sjpe.12034
M3 - Article
VL - 61
SP - 48
EP - 77
JO - Scottish Journal of Political Economy
JF - Scottish Journal of Political Economy
SN - 0036-9292
ER -