Imperfect goods and labor markets, and the union wage gap

• Main Author: Sanner, Helge
• Format: Others
• Language: English
• Published: Universität Potsdam 2005
• Subjects: Verhandlungstheorie; Monopolistische Konkurrenz; Gewerkschaften; union wage premium; comparative analysis; wage differentials; dual labor market; monopolistic competition; Economics
• Online Access: http://nbn-resolving.de/urn:nbn:de:kobv:517-opus-6511; http://opus.kobv.de/ubp/volltexte/2006/651/

Existing theoretical literature fails to explain satisfactorily the differences between the pay of workers that are covered by collective agreements and others who are not. This study aims at providing a model framework which is amenable for an analysis of this issue. Our general-equilibrium approach integrates a dual labor market and a two-sector product market. The results suggest that the so-called 'union wage gap' is largely determined by the degree of centralization of the bargains, and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.