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Wage Formation in a Two-Sector Open Economy with Two Strong Unions

Published online by Cambridge University Press:  17 August 2016

Oddbjørn Raaum
Oddbjørn Raaum*
Affiliation:
Department of Economics, University of Oslo
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Extract

1. INTRODUCTION

Observing wage formation, at least in Norway during recent years, you cannot miss the unions increased emphasis on relative wages in the wage negotiations. This focus might be motivated by tactical reasons. Relatively decreasing wages is often a good argument, at least as far as support from the public opinion is concerned. On the other hand, people’s appreciation of their situation (here wages) does often depends on the situation of “groups with which we naturally compare ourselves”.

The economics of trade unions is a rapidly expanding area. Oswald (1985) and Pencavel (1985) have given surveys of the last years’ literature. So far, little attention has been paid to the existence of different sectors and trade unions in the economy. A multisectoral framework may imply interdependence between the wage claims of the different unions. When the unions care about relative wages, there will be implications for the wage formation process. In an economy with more than one union there might exist links between wage claims of different trade unions. There are roughly three main ways in which the interdependence takes place. First, the wage claims of one union may affect the demand for workers who are members of the other unions.

Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 52 , Issue 3-4: Symposium on Unemployment in Europe , December 1986 , pp. 283 - 311
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1986 

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Footnotes

*

I wish to thank Tor Hersoug and Michael Hoel for helpful discussion and comments.

References

LITERATURE

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