Union Wage Determination: Policy Implications and Outlook

Monetary union enlargement, scal policy and strategic wage setting

This contribution develops a framework for studying the e ects of the enlargement of a monetary union on macroeconomic performances in the presence of strategic interactions between non atomistic labour unions, monetary and scal authorities. We show that the extension of the monetary union to new identical member countries may have bene cial e ects, depending on the scal policymaking parameters...

Non-uniform wage-staggering: European evidence and monetary policy implications

In many countries, wage changes tend to be clustered in the beginning of the year, with wages being set for xed durations of typically one year. This has been, in particular, documented in recent years for European countries using microeconomic data. Motivated by this evidence we build a model of uneven wage staggering, embedded in a standard DSGE model of the euro area, and investigate the mon...

Wage-Employment Determination and a Union Tax on Capital: Can Theory and Evidence be Reconciled?

If unions appropriate quasi-rents from relation-specific capital, observed factor prices no longer reflect effective costs. Unionism has effects akin to a partial factor tax on capital. Demand curve settlements need not imply higher K/L among union firms. JEL code: J51 (Trade Unions: Objectives, Structure, and Effects) *Helpful suggestions were received from John Chilton, Eric Maskin, and Joe S...

Wage Indexation and Monetary Policy∗

This paper analyzes the impact of indexed wage contracts on inflation and social welfare in a Barro–Gordon model with state contingent monetary policy. Wage indexation reduces the inflation bias but may raise the variance of inflation rates. In social optimum wages are fully indexed to the price level, but this requires optimal wage adjustments to productivity shocks. If wage adjustments to pro...

"The Union Wage Effect Re-Examined"