Bargaining Structure Research Articles

Wage bargaining structure and political budget cycles: A policy game approach

Utilizing a panel dataset from OECD countries, this study unveils new evidence suggesting that the centralization of wage bargaining plays a significant role in mitigating Political Budget Cycles. To explain this empirical finding, the paper introduces a political economy model based on a policy game framework, encompassing three key agents: (i) an opportunistic government that decides on the level of budget deficits with the objective of enhancing its reelection prospects, (ii) workers/voters who decide on their sectoral affiliations, and (iii) unions that independently negotiate wages with firms. In this model, the opportunistic government has an incentive to run a budget deficit to favor the median voter, who is affiliated with non-tradable sectors. The mechanism emerges from the impact of debt-financed public spending on relative prices, and consequently, on relative wages between non-tradable and tradable sectors. Wage centralization mitigates the political incentive of opportunistic governments by attenuating the responsiveness of sectoral wages to sectoral prices, thereby pushing down budget deficits towards a socially more optimal level.

On the emergence of cooperative industrial and labour relations

AbstractWe explore the long‐run determinants of current differences in the degree of co‐operative labour relations at the local level. We do this by estimating the effect of the medieval communes –that were established in certain cities in Centre‐Northern Italy towards the end of the 11th century – and that contributed to the emergence of a co‐operative attitude in the population on various proxies for current co‐operative labour relations. Conditional on a large set of firm and municipality level controls, as well as a full set of province fixed effects, we find that firms located in municipalities that had been a free medieval commune in the past have higher current probabilities to adopt two‐tier bargaining structures and to be unionized. We also report instrumental variables (IV) and propensity score estimates that confirm our main results.

Monetary policy rules and wage bargaining structure in a New-Keynesian general equilibrium model with strategic interaction between unions and monetary authority

The objective of this article is to present a New Keynesian general equilibrium model in which the multiplicity of wage and price setters in a framework of strategic interaction between the private sector and monetary authority is a sufficient condition for non-neutrality of the monetary policy rule. In this theoretical framework we can show that (i) strategic interaction between monetary authority and labor unions produce the so-called “Calmfors-Driffil effect” in which different levels of centralization in wage bargains allowed to reach different results in terms of equilibrium unemployment rate; (ii) a higher level of conservatism in the conduction of monetary policy; i.e. higher weight for deviations of price inflation from the target in the monetary policy rule, for a given level of centralization of wage bargaining, produce better outcomes in terms of inflation and unemployment. These results shows that there is a trade-off between centralization of wage bargaining and a tighter monetary policy rule: the more centralized is the wage bargaining structure lower can be the weight of inflation in the monetary policy rule that allowed Central Bank could be to achieve some target level of inflation and unemployment. So, the model proposed here shows that income policies can be, in principle, such effective as monetary policy as a device for improve macroeconomic performance of capitalist economies.

Discrimination through Bargaining Structures: Gender Bias in the National Coal Board and British Coal

In its analysis of the pay determination of British Coal canteen workers, this article introduces that by Kathy O’Donnell, who argues that, in all but name, canteen workers were part of a single bargaining structure that included male surface mineworkers. It is drawn from the evidence prepared for the National Union of Mineworkers in late 1990 in support of an equal pay claim for female canteen workers and cleaners employed by British Coal. The claim was successful. Two points clearly emerge. First, job segregation allowed women workers to be placed in a separate grading structure from men, and even if there was some overlap between the two at the bottom of the one and at the top of the other, the situation was one in which there was no effective difference from the operation of a single grading structure. But for this institutional segregation, there would have been a much more transparent instance of pay discrimination.

Female Education and Brideprice: Evidence from Primary Education Reform in Uganda

Abstract Universal primary education (UPE) policies have been shown to improve educational attainment and delay marriage and childbearing, particularly among rural girls. This disproportionate improvement in female relative to male education can change the bargaining structure between the wife and the husband. Furthermore, with the expectation of this change, decisions about marriage-market entry, matching, and marital arrangements, such as brideprice, can change. In particular, greater female bargaining power can increase the share of marriages without a brideprice in settings where husbands may demand a refund upon divorce. Using first-hand data on marital transfers and exploiting Uganda’s UPE, which abolished primary school fees in 1997, this study shows that longer UPE exposure is associated positively with female education and negatively with brideprice practice. The results imply that UPE policies can affect women’s marital lives by empowering them in household decisions. The study also discusses the consistency of the results with other potential mechanisms, such as selective marriage-market entry, marital squeeze, and assortative matching.

The Future of Unions and Worker Representation: The Digital Picket Line

The Future of Unions and Worker Representation, written by Professor Anthony Forsyth, thoroughly examines four countries and industrial relations systems—Australia, the UK, the USA, and Italy—to assess and contrast their similarities and differences. The choice of these systems is not accidental. The author compares three industrial relations systems that are rooted in the common law and currently share a very fragmented collective bargaining structure with that of a civil law-based system that, despite recent attempts at decentralization, still maintains a more centralized structure. The interest of Anglophone scholars towards industrialized non-English speaking countries is relatively uncommon, making this element of the study original and valuable in itself in recent labour and industrial relations scholarship. In the book, Professor Forsyth offers a detailed and insightful description of the trends and developments in unionization and labour regulation in all four countries. His comparative analysis shows a deep understanding of the structures of their systems, their recent historical evolution, and the challenges they currently face, both shared and unique.

Wage bargaining structure and budget deficits: a policy game approach

Wage bargaining structure and budget deficits: a policy game approach

Facts and Fantasies about Wage Setting and Collective Bargaining

In this article, we document and discuss salient features of collective bargaining systems in the OECD countries, with the goal of debunking some misconceptions and myths and revitalizing the general interest in wage setting and collective bargaining. We hope that such an interest may help close the gap between how economists tend to model wage setting and how wages are actually set. Canonical models of competitive labor markets, monopsony, and search and matching all assume a decentralized wage setting where individual firms and workers determine wages. In most advanced economies, however, it is common that firms or employer associations bargain with unions over wages, producing collective bargaining systems. We show that the characteristics of these systems vary in important ways across advanced economies, with regards to both the scope and the structure of collective bargaining.

Varieties of organised decentralisation across sectors in Denmark: A company perspective

The decentralisation of European collective bargaining has been subject to much research and IR modelling. However, these studies mainly focus on the implications for national and sectoral bargaining institutions and rarely include a company perspective. Based on cross-sectional representative survey data among managers and shop stewards in Denmark, this paper offers a fresh perspective on the recent decentralisation process. We explore if company-based bargaining structures are in place and whether local social partners have utilised these bargaining opportunities across distinct sectors after decades of decentralisation. Analytically, we seek inspiration from Visser's (2016) distinct forms of organised decentralisation and combine these with insights from the broader literature on IR and institutional change. We find that bargaining practices and institutions at company level depend on a combination of provisions for company-based wage bargaining within individual sector agreements and strong union-affiliated workplace representation.

A CRITIQUE OF COLLECTIVE BARGAINING POLICY IN NIGERIA FROM COLONIAL ERA TILL DATE

This study focused on a critical evaluation of collective bargaining policy in Nigeria from the historical perspective. The main objective of this study was to evaluate the structure and system of collective bargaining in Nigeria since the colonial period. The study adopted a conceptual analysis and theoretical explanation of the origin, development, weakness, and state involvement in collective bargaining policy in Nigeria through a critical review of extant literatures. The study revealed that collective bargaining as machinery for wage determination in the public sector is supposed to prevent the unilateral imposition of wages on the union by the government and vice versa as the case may be. However, it is not often used by the Nigerian government to determine wages rather government relied more on wage commissions, wage tribunals, and civil services administrative rules to determine wages in the public sector. Therefore, collective bargaining appears to be ineffective as a potent tool for wage determination in Nigeria’s public sector. The study also discovered that collective bargaining machinery in Nigeria is weak because of government’s direct involvement in collectivebargaining process to review, amend, even absolutely reject the collective agreement reached between unions and the government representative at the bargaining table. The study, therefore, concluded that collective bargaining is not an effective institution within the context of employment relations in Nigeria.

Who wants wage moderation? Trade exposure, export-led growth, and the irrelevance of bargaining structure

An extensive literature in comparative political economy has examined the determinants of wage militancy and moderation at the country level. So far, however, there has been no attempt to analyse the determinants of wage satisfaction and dissatisfaction at the individual level. Based on two waves of the International Social Survey Programme, this article seeks to fill this void. It examines to what extent trade exposure affects individual attitudes towards wages, and whether bargaining institutions facilitate the internalisation of competitiveness requirements, as suggested by the vast literature on neocorporatism. Surprisingly, no relationship is found between the structure of wage bargaining (more or less coordinated or centralised) and wage dissatisfaction at the individual level. Instead, wage dissatisfaction decreases strongly when workers are individually exposed to trade and countries rely heavily on export-led growth. The findings point to the need to rethink the determinants of wage moderation. Supplemental data for this article can be accessed online at: https://doi.org/10.1080/01402382.2021.2024010 .

Downstream competition and profits under different input price bargaining structures

In a vertically related duopoly with input price bargaining, this paper re-examines the downstream firms’ profitability under different market competition degrees. It is shown the rather counterintuitive result that downstream firms earn highest profits with semi-collusion, whose level depends on the upstream bargaining structures, the relative parties’ bargaining power, and the parameters measuring the degree of product differentiation in the downstream market. Concerning social welfare, the key result is that policymakers can tolerate some degree of collusion with decentralized bargaining structures; centralized structures advise for a more procompetitive policy.

Cramdown, reorganization bargaining and inefficient markets: The cases of the United States and China

AbstractThe cramdown rule (11 USC s 1,129(b)) originates from the U.S. 1978 Bankruptcy Code as an innovative mechanism. The cramdown provision is rarely used in judicial practice in the United States. However, it is a key rule to understand the parties' bargaining structure. The inactive cramdown provision yet has been widely transplanted into other jurisdictions, including China. Little literature exists to explore the economic rationale of cramdown provision mainly because of its inactiveness in practice. This research explores the economic function of the cramdown provision in an inefficient market, using the cases of United States and China. This research observes that the cramdown provisions can only effectively function with the essential conditions and elements, such as the Best Interests of the Creditors Test, good faith, feasibility, fairness and equitability as well as the absolute priority rule. Therefore, the partial transplantation of the cramdown provision might not be effective.

Social Class, Union Strategies, and Preference in Wage Outcomes in Norway

This article explores a potential socialization effect of unions on member preferences in wage outcomes and bargaining structures. This challenges notions of union wage policies simply reflecting the material self-interest of their constituency. In their formative role, unions can either propagate more redistribution in society, that is, increasing equality, or increasing societal inequalities, arguing instead for equity. However, equity could be measured either individually or collectively, where the latter would mean increasing societal wage inequalities while favouring intra-union equality. By putting perspectives on worker preferences and political economic theories in dialogue with the literature on the role of unions in constructing notions of equality/equity, we discuss on union strategy as it relates to their socialization effects and members’ attitudes towards income inequality and bargaining structures. Analysing survey data, we find that socioeconomic status has greater influence on preferred wage outcomes, while union membership has more influence over bargaining structure.

The effects of collective bargaining systems on the productivity function of firms: An analysis of bargaining structures and processes and the implications for policy making

AbstractIn recent years, individual and company bargaining have increasingly supplanted sector and country collective bargaining leading to increasingly heterogeneous and perforated, that is, hybrid, national collective bargaining systems. Little is known about the relative effects of these different systems. In this paper, the authors derive and test a comprehensive categorization of collective bargaining systems and argue that different systems are associated with different production functions and therefore have different effects on labour productivity. The hypotheses are tested using representative workplace‐level data for all member states of the European Union. It is found that the performance of coordinated sector collective bargaining systems is higher than for all other forms of collective and individual bargaining. Policy implications of the results are discussed as these results challenge attempts to reform collective bargaining in Europe.

Unions and collective bargaining in Australia in 2020

The sudden and dramatic lockdowns in Australia resulting from the COVID-19 pandemic brought great uncertainty and much change during 2020. This review concentrates on the impacts of these contextual changes on Australian unions and collective bargaining. Union efforts to cooperate with governments in policy-making and with employers at a workplace level were greeted with applause. But other arenas, as the crisis moderated, saw more traditional adversarialism. In particular, the failure of the parties to agree on legislative change meant that the government’s ‘omnibus’ bill, presented to parliament in December, would prove controversial and strongly contested in the new year. The structure and process of collective bargaining seemed to change remarkably little in 2020. A closer examination of the practice and outcomes of collective bargaining, however, suggests continued difficult times for workers and unions.

Bargaining in a multi-echelon supply chain with power structure: KS solution vs. Nash solution

<p style='text-indent:20px;'>This paper studies a multi-echelon serial supply chain with negotiations over wholesale prices between successive echelons. Two types of bargaining systems with power structures are compared: one adopts the generalized Kalai-Smorodinsky (KS) solution and the other adopts the generalized Nash solution. Our analyses show that, for any KS bargaining system with a given bargaining power structure, there is a Nash bargaining system with another bargaining power structure, such that the two systems are the same. However under the same power structure, the generalized KS solution results in lower wholesale price and higher total supply chain profit than the Nash solution does. Finally, we characterize the necessary and sufficient condition of the bargaining power structure under which the KS bargaining system Pareto dominates the Nash bargaining system, and the set characterized by such condition does not shrink to an empty set as the number of echelons increases to infinity.</p>

Renegotiating Belt and Road cooperation: social resistance in a Sino–Myanmar copper mine

In what way can societal actors in transitional polities play a role in influencing bilateral economic agreements? Societal actors are often ignored in the state-centric international relations literature. We, however, contend that social resistance to a foreign development project can reshape the international outcome, even under an asymmetric bargaining structure, if two conditions are met: the host country’s policy options are conditioned by citizens’ resistance; and the home country is eager to continue cooperation. To make this argument, this paper examines the social resistance to the China-backed Letpadaung copper mine in Myanmar amid the host country’s democratisation. Employing a process-tracing technique and drawing upon extensive interviews from 2015–2019, official documents and secondary data, we argue that a popular anti-mining movement transformed a previous state-to-state bargaining process into a two-level game negotiation. As a result, the rise of societal actors was able to disrupt project implementation and extract concessions from China in exchange for project resumption.

Toplu Pazarlık Kapsamını Etkileyen Faktörler: Karşılaştırmalı Endüstri İlişkileri Temelinde Türk Endüstri İlişkileri Sisteminin Modernizasyonu

As it is in Scandinavian countries, a high union density ensures the enhancement of collective bargaining coverage rates and also, the collective bargaining coverage can be boosted by the extension mechanism in countries with a high employer organisation density, as it is in France. Additionally, the role of collective bargaining levels, coordination degrees among bargains and the extension mechanism should be examined to fully understand the disparities in collective bargaining coverage rates across countries, and the differences of union density and collective bargaining coverage within the country. However, in the case of Turkey, it has been seen that there is a limited number of empirical studies related to the coverage and changes in the structure of collective bargaining and the factors affecting the collective bargaining coverage. To address this gap and to contribute to the literature, this research, using Amsterdam University database on Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts and OECD’s data, mainly aims to analyse the relationship between collective bargaining coverage and the factors affecting collective bargaining coverage based on the comparative industrial relations. Additionally, in the conclusion section, the model proposals for the modernisation of the Turkish industrial relations system are discussed. This study originally concluded that there is a significantly moderate size of correlation relationship between collective bargaining coverage rates and coordination degrees of collective bargaining and the usage frequency of the extension mechanism while having a significantly large size of correlation relationship between collective bargaining coverage rates and the employer organisation density, and a predominant collective bargaining level.

Union oligopoly and entry in the presence of homogeneous labor

Abstract. The analysis discusses the labor market equilibrium under union oligopoly, where unions represent homogeneous workers and use employment strategies. The following points are addressed: 1. The labor market outcomes in the presence of; a. uncooperative behavior among unions; b. uncooperative environment with a leading union; c. collusive (coordinated unions) behavior among unions; d. globally efficient bargaining, are confronted. A specific example with a Stone-Geary utility function and linear demand is forwarded. 2. Supply dynamics may push up employment and, therefore, the number of unions. In equilibrium, some bounds exist to the number of unions the market can support, which are investigated in the example. Five supply dynamics are considered: a. reservation wage restriction; b. a standard labor supply constraint; c. number of unions equal demand; d. individualistic unions; e. existence of a minimum (employed) membership requirement. The equilibrium number of unions for the Cournot-Nash, Stackelberg and efficient bargaining structures is derived for the case where unions exhibit Stone-Geary preferences and labor demand is linear. Keywords. Unions, Wage determination models, Union bargaining, Corporatism, Imperfect competition and union behavior. Union oligopoly. JEL. J51, E24, D49, C79.