Working Paper: CEPR ID: DP320
Authors: Stephen Nickell; Sushil Wadhwani
Abstract: This paper derives and then estimates a model of employment where unions and firms bargain over wages and possibly employment, and efficiency wage considerations may be important. It illustrates the difficulties involved in interpreting many existing attempts to discriminate between alternative models. The results (based on over 200 UK firms) suggest that employment is negatively related to the firm's own wage, and some results point to a positive relationship with the alternative wage, such that the implied aggregate employment schedule may even be "perversely" sloped. Various financial factors are also seen to have a significant effect on employment.
Keywords: employment; efficient bargaining; efficiency wage; union; labour demand
JEL Codes: 824; 831
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm's own wage (J31) | employment (J68) |
| alternative wage (J31) | employment (J68) |
| financial factors (G29) | employment (J68) |
| unions (J51) | employment adjustments (J63) |