Bargaining Structure Research Articles

Institutional Structure and Labor Market Outcomes: Western Lessons for European Countries in Transition

Changes in economic systems provide a rare opportunity to redesign basic institutional structures in labor markets. This paper attempts to provide guidance for such institutional choice by drawing on the findings of recent labor market research in market economies on the links between institutional structure and labor market performance. After considering the suitability of research from market economies for the labor market problems faced by economies in transition from central planning, the paper considers the effects of alternative institutions for wage determination (collective bargaining structures and minimum wage and indexation legislation), employment security, income security, and active labor market policy.

Bargaining and Participation in Norway

AbstractIn this paper, changes in Norwegian bargaining and participation since the end of the eighties are discussed in a twenty year perspective. It is argued that a corporatist bargaining structure has been reinstated as a pragmatic measure to handle a difficult economic situation. This is contrary to the general political sentiments which have prevailed since the beginning of the eighties. However, a new constellation of actors are emerging on the organisational level who may irreversibly change the bargaining structure. With regard to participation, the laws and institutions that were introduced during the 1970s are still in place. However, their content is changing from democratisation as a value by itself to a focus on productivity-improvement as the ultimate goal.

Decentralisation and devolution in local government: pressures and obstacles

Pressures to decentralise management and bargaining structures in local government have been building up for over a decade. Here the author presents findings from case studies of two local authorities. The chances for success of such moves are discussed through an analysis of intra‐organisational conflict and multi‐lateral bargaining.

Team selection — An experimental investigation

Players 1 and 2 own certain resources which Player 0, the entrepreneur, wants to employ. Let the gross profit of the entrepreneur 0 after selecting a team T of resources be V( T), where T can take values Φ, {1}, {2} or {1,2}. How much will Player 0 pay for the resources? In this paper, a simple stylized bargaining process, namely Ultimatum Bargaining, is assumed. In a first step, Players 1 and 2 demand certain rewards a i , for their resources. Player 0 then selects a team T, the members of which are paid by him at the rates they have demanded, a i . Then a 0 = V( T) − Σ i∈ T a i is left for the entrepreneur. Such a “bargaining structure” can be found, for example, in the PURPA-auctions (electricity auctions) in the United States. For most other cases, the game describes a possible last round with the ultimatum demands of the potential members. In this paper, experiments are presented with V({1, 2}) = DM 100.00, V( Φ) = 0, and with five different values for e = V({1}) or V({2}), the profit earned by one-person teams. Although the game-theoretic equilibria vary greatly for different values of e, the average demands of the potential team members remained fairly constant.

Wage Bargaining Structure, Employment and Economic Integration

It is widely believed that the integration of European economies will have little impact on labor mobility. This does not mean, however, that European labour markets will be unaffected by the process of economic integration. In this paper we show that, with increased competition resulting from closer economic integration, the hump-shaped pattern summarising the relationship between economic performance and the degree of centralisation in wage bargaining (Calmfors and Driffill, 1988) flatterns out. As a consequence, the importance of where a particular economy stands on the wage bargaining scale diminishes.

The Decentralization of Collective Bargaining: A Literature Review and Comparative Analysis

The author reviews evidence that the bargaining structure is becoming more decentralized in Sweden, Australia, the former West Germany, Italy, the United Kingdom, and the United States, although in somewhat different degrees and ways from country to country. He then examines the various hypotheses that have been offered to explain this significant trend. Shifts in bargaining power, as well as the diversification of corporate and worker interests, have played a part in this change, he concludes, but work reorganization has been more influential still. He also explores how the roles of central unions and corporate industrial relations staffs are challenged by bargaining structure decentralization, and discusses the research gaps on this subject that need to be filled.

Unemployment, Labour Markets and Structural Change in Eastern Europe

Labour markets in Eastern Europe Michael Burda Unemployment is a major concern in the transforming economies of Central and Eastern Europe. The modern ‘flow approach’ to labour markets suggests both that unemployment is an important component of the transformation process and that the labour market institutions adopted will influence the rate of unemployment in the long run. To date, Eastern European countries exhibit considerable divergences in several of these institutions; especially in unemployment benefit systems, collective bargaining structures, and active labour market policies. An aggregate matching function is successfully estimated for data from Czech and Slovak employment offices. Emerging labour markets in the East function not so differently from those in the West. The implied dynamics make both ‘big bang’ and ‘benign neglect’ unattractive strategies for transformation: a ‘mixed bang’ is more appropriate. Quantitative evidence about the effects on unemployment of different labour market institutions in OECD countries is used to make long-term projections of equilibrium rates of unemployment in Central and Eastern Europe, given the labour market institutions now in place there. With the possible exception of the Czech Republic, high unemployment is likely to be pervasive and persistent.

Costs of Negotiations and the Structure of Bargaining – A Note

Horn und Wolinsky zeigten in ihrem Modell zur Erklärung der Struktur von Gewerkschaftsverhandlungen, daß komplementäre Arbeiter separate Gewerkschaften bilden, während substitutive Arbeiter eine einheitliche Gewerkschaftsorganisation wählen. In jedem Fall jedoch sind die Interessen der Arbeiter und der Firma diametral entgegengesetzt. Diese Arbeit zeigt, daß aufgrund von Externalitäten die Einführung von relativ geringen Verhandlungskosten das Entstehen eines relativ weiten Bereiches erklärt, in welchem die Interessen von Arbeitnehmern und Arbeitgebern bezüglich der Struktur der Verhandlungen gleichgerichtet und nicht entgegengesetzt sind.

Income distribution, efficient bargaining and market structure

We present an efficient bargaining model in which wage share is negatively associated with product market structure and varies positively with union bargaining strength. The model is tested using data from a panel of U.K. manufacturing industries. Instrumental variables estimates corroborate a positive (negative) union bargaining strength (concentration) effect on labour's income share.

Bargaining Power and Wage-Employment Contracts in a Unionized Industry

Input and output data are used in conjunction with negotiated wages and employment to estimate a fully specified bargaining model between a labour union (the International Woodworkers of America) and representatives from the British Columbia Wood products industry. Bargaining powers are modelled as functions of exogenous variables believed to have influenced the parties' relative strike costs. The estimated bargaining powers are plotted over time and compared to the proportion of rents captured by each party. Parameters of the union utility function and the firms' technology are also estimated and hypothesis tests are conducted on various aspects of the model. There are still relatively few studies in which fully specified models of bargaining between labour unions and firms are estimated. This reflects both the extensive data requirements and the complexity of the models involved. A fully specified model includes a representation of the firms' objectives and technological constraints, the union's goals and constraints and the bargaining structure. Furthermore, even when micro data are available, usually more than two parties are involved i.e. firms will negotiate with several unions and each union will have to deal separately with the many firms operating within the industry. This complicates the modelling of the bargaining setting considerably. In this study, data on the wood products industry in British Columbia, Canada are analyzed. During the period under study (1963-1983), negotiations in this industry were highly centralized. In fact, the bargaining setting can be described as a bilateral monopoly between the International Woodworkers of America (IWA), a powerful and stable union and the Forest Industrial Relations, an employer association representing firms in the industry. This data set includes information on outputs and nonlabour inputs thus allowing the calculation of profits and the joint determination of output and other inputs along with employment and wages. A structural model with four dependent variables-wages, employment, output and a materials and supplies input-is estimated. Firms are assumed to maximize profits and union objectives are modelled by a CES utility function with employment and the difference between union wages and alternative wages as arguments. Given a representation for the firms' technology and the union preferences, a

Union Wage Bargaining and Status

The paper investigates the nexus between the structure of union wage bargaining and workers' preferences for status, which is measured by relative wages. For two types of workers it is shown that due to externalities on the other group's status wages of both types of workers will be lower if an encompassing union negotiates for the whole workforce than if different groups of workers are unionized separately. Moreover, unemployment will be reduced by the central union relative to separate negotiations even if unions are not concerned with employment effects of wage negotiations at all.

Bargaining Structure and Strike Activity

In this paper, the authors examine the nature of the relationship between bargaining structure and strike activity. In particular, they focus on the implications of the fact that the amount of information revealed by a union's actions depends on the bargaining environment in which it operates. The authors demonstrate that a union representing workers of more than one firm will face a greater incentive to reject offers than an independent union. This implies that a merger of two unions or the formation of bargaining coalitions will lead to a greater level of strike activity.

Unions and the structure of earnings inequality: Cross-national patterns

We examine differences in the structure of earnings inequality for men in four advanced western industrialized nations that differ in the nature and extent of unionism: the United States, Canada, Norway, and Sweden. We argue that the economic effects of unionism depend on whether (1) the bargaining structures of labor markets are centralized or fragmented; and (2) the political organization can be characterized as a corporatist or a pressure-group system. We find some support for our principal hypotheses that cross-national differences in systems of collective bargaining and political institutions affect the size of the earnings gap between male union and nonunion members, as well as the extent of wage dispersion among unionized workers.

Does Centralized Collective Bargaining Promote Wage Restraint? The Case of Israel

This study examines whether centralized collective bargaining promoted wage restraint in Israel in the period 1968–84. Wage determination in Israel appears to be highly centralized, and the author shows that wage increases under central settlements during the period studied were almost invariably consistent with the goal of preserving competitiveness. Except in periods when there was consensus among major interest groups that sacrifice was necessary, however, wage drift tended to render the central federation's exercise of restraint ineffective. These results, the author concludes, support the view that consensus, and not the structure of collective bargaining per se, is the key to success in “corporatist” economies.

Joint management and employee participation: labor and management at the crossroads

Introduction: participation, joint management and integrative bargaining. Part 1 A proposal for jointly managed organizations: the roots of joint management principles for designing and operating the parallel organization the structure of the parallel organization the process of integrative bargaining jointly managed workplaces - four examples. Part 2 The dynamics of jointly managed organizations: redesigning processes for planning and controlling gaining power by giving up control dealing with conflict and competition. Part 3 Individuals in jointly managed organizations: individual needs, attitudes and behaviours motivating managers and workers leaders who empower people. Part 4 Groups in jointly managed organizations: how groups become teams action teams - linking planning and implementation planning teams - reconciling workplace interest groups autonomous work teams - merging the parallel and the primary organizations. Part 5 Special skills for implementing joint management: interpersonal and communication skills problem-solving skills proposal writing skills. Part 6 Creating equity and incentives: job and performance evaluation systems productivity gain sharing employee ownership. Part 7 Applying joint management thinking: extending the bargaining structure - roles for management and unions how management must change to make joint management work how labour must change to make joint mangement work. Part 8 The social impact of jointly managed, participative organizations: people and productivity joint management and social policy.

Trends in Wage Bargaining in New Zealand: The 1988/9 Wage Round

Abstract Changes to New Zealand's labour laws enacted by the Labour Government since 1984 have placed all New Zealand employers and workers, regardless of what sector of the economy they have traditionally operated in, under the bargaining provisions of the Labour Relations Act 1987. The authors analyse bargaining outcomes for the 1988/9 wage round, the second wage round since the implementation of the Act but the first to include freely negotiated settlements covering state employees. Some evidence of changed bargaining structures is cited but the rate of change is slow. However, bargaining outcomes are showing considerable change: wage increments have been kept below the rate of inflation, with settlements compressed around 4 percent; there has been increased flexibility in the types of wage settlement, with many settlements incorporating straight monetary increases compressing internal wage relativities; broad-banding of salaries and performance related pay has been widely introduced in the general pub...

Enterprise Bargaining: Making Australia Competitive

AbstractThe Australian economy has increasingly come under the influence of international factors. This has placed greater pressures on Australian businesses to be more competitive. This requires changes in both management and union practices, and changes in the institutional arrangements in which industrial relations are conducted. The paper argues the case for the general movement to enterprise bargaining. This will necessitate a major overhauling of bargaining structures and of trade union and employer association structures and practices. The award restructuring brought about by National Wage Case decisions provides but a preliminary step in the movement to an enterprise focus which will be critical to internationally competitive industries.

Annual Review Article 1989

AbstractThis Annual Review Article 1989 considers the rising trend in inflation and earnings and indicates that in a wide variety of industries there was a marked upturn in union bargaining activity and industrial conflict. The Review considers some significant changes in employer preferences for particular unions in new or revised bargaining structures, and concludes with an examination of the debate concerning the ‘juridification’ of collective bargaining in the context of a possible return to ‘adversarial’ as opposed to ‘new’ industrial relations.

THE IMPACT OF STATE PAY POLICY AND COLLECTIVE BARGAINING STRUCTURE ON THE CHARACTER OF INDUSTRIAL CONFLICT

In this paper we have argued that the reasons for the unusually high level of unofficial strike action in Ireland has little to do with the nature of the industrial relations system, or with any deep‐seated historical ideological conflict among the principal interest groups. Rather it was the marked departure in public policy in relation to pay and collective bargaining that were the principal causes of high proportions of unofficial strikes. Our basic view about unofficial strikes is that they arise because of the presence of some structural rigidity, which, in turn, results from the nature of the bargaining structure. For example, an extended period of centralized pay bargaining leads to a stiffening of local employer‐employee relationships and procedures which, previously in a decentralized structure, were more flexible and less strict and precise in their formulation and application. This change in the bargaining structure leads to increased levels of unofficial action for a variety of reasons, which are discussed in the paper. There are also other contextual and structural factors which may influence or intensify levels of unofficial action: the type of work in which people are engaged, the strike issue, sector ownership, industry, trade union, and firm size.

TAX INCIDENCE, MARKET POWER, AND BARGAINING STRUCTURE

This paper considers the incidence of both factor taxes and an income/consumption tax in a general equilibrium model with unionized labor markets and imperfectly competitive product markets, focusing especially on the implications of different bargaining structures in the labor market for tax incidence. The determinants of tax incidence are shown to be very different from the competitive case; in particular, more than 100 percent shifting of general, as opposed to sector specific wage and income/consumption taxes is possible, and the shifting of the wage tax generally increases, rather than decreases, with the elasticity of substitution between labor and capital in production. Also, changes in firm market power and union bargaining power are shown to have counterintuitive effects on the degree of shifting of taxes. Copyright 1990 by Royal Economic Society.