Contemporary Labor Economics当代劳动经济学课件.ppt

* * * * * * * * * * * * * * * * * * * * 5. Strikes and the Bargaining Process Accident Model Expected Strike Length Wage 0 The employer concession curve EC shows the maximum wage that the firm would be willing to pay to avoid a strike of a given length. EC UR W* The union resistance curve UR shows the minimum wage that the union would be willing to accept to avoid a strike of a given length. If both the union and the firm are well informed about the other party’s concession curve, then the wage settlement will occur at W* where the UR and EC curves intersect and no strike will occur. If either party misperceives the other party’s concession curve, then a strike will occur. Two types of strike models based on asymmetric information have been developed. The first model focuses on the information gap between the union leadership and rank and file union members. Union leaders have better information about bargaining possibilities. Union members have unrealistic demands Union leaders call strike to moderate demands Asymmetric Information Models The second type of strike model emphasizes the information differences between the union and the firm. Firm has more information about the current and future profitability of the firm than the union. The firm has an incentive to understate the profitability of firm since it can reduce the wage settlement by doing so Asymmetric Information Models Questions for Thought: 1. Assume that a union’s utility only depends on the wage rate and not the level of employment. In this case, what will be outcome under the efficient contracts model? 2. What role does information differences play in causing strikes? EndChapter 10 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Jump to first page Next page Chapter 10: Labor Unions and Collective Bargaining 1. Why Unions? Workers prior to industrial revolution were self-employed (i.e., worked for themselves). Industria