Equilibrium unemployment under negotiated profit sharing

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Title: Equilibrium unemployment under negotiated profit sharing
Author: Koskela, Erkki ; Stenbacka, Rune
Organization: Suomen Pankki
Series: Suomen Pankin keskustelualoitteita
Series number: 19/2003
Year of publication: 2003
Publication date: 13.8.2003
Pages: 28 s.
Keywords: työmarkkinat; työmarkkinajärjestöt; työllisyys; työvoima; kysyntä; palkat; työttömyys; häiriöt; tulospalkkaus; neuvottelut
JEL: J51; J41; G32
Abstract: We study employment, employee effort, wages and profit sharing when firms face stochastic revenue shocks and when base wages and profit shares are determined through collective bargaining.The negotiated profit share depends positively on the relative bargaining power of the trade union and has effort-enhancing and wage-moderating effects.We show that higher profit sharing reduces equilibrium unemployment under circumstances with sufficiently rigid labour market institutions, ie sufficiently high benefit- replacement ratios and relative bargaining powers of trade unions.Conversely, profit sharing seems to be destructive from the point of view of employment when the labour market rigidities are sufficiently small. Key words: wage bargaining, profit sharing, efficiency wages, equilibrium unemployment JEL classification numbers: J51, J41, G32
Note: Ilmestynyt myös Helsingin yliopiston kansantaloustieteen laitoksen keskustelualoitteita 590.
Rights: https://helda.helsinki.fi/bof/copyright

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