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Unions in a frictional labor market

Krusell, Per and Rudanko, Leena (2016) Unions in a frictional labor market. Journal of Monetary Economics, 80. 35 - 50. ISSN 0304-3932

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Identification Number: 10.1016/j.jmoneco.2016.04.006


A labor market with search and matching frictions, where wage setting is controlled by a monopoly union that follows a norm of wage solidarity, is found vulnerable to substantial distortions associated with holdup. With full commitment to future wages, the union achieves efficient hiring in the long run, but hikes up wages in the short run to appropriate rents from firms. Without commitment, in a Markov-perfect equilibrium, hiring is too low both in the short and the long run. The quantitative impact is demonstrated in an extended model with partial union coverage and multiperiod union contracting.

Item Type: Article
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Additional Information: © 2016 Elsevier B.V.
Divisions: Economics
Subjects: H Social Sciences > HD Industries. Land use. Labor
Date Deposited: 13 Jul 2020 13:12
Last Modified: 20 Oct 2021 01:03

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