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Trade Union Priorities and Wage Rigidity
Author(s) -
Drakopoulos Stavros
Publication year - 1994
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/j.1467-9914.1994.tb00177.x
Subject(s) - wage , economics , rigidity (electromagnetism) , trade union , monopoly , labour economics , variable (mathematics) , function (biology) , efficiency wage , point (geometry) , microeconomics , mathematics , engineering , mathematical analysis , geometry , structural engineering , evolutionary biology , biology
ABSTRACT: The starting point of the paper is that trade unions engage in substitution once certain targets have been met. This implies that a priority‐based or hierarchical model might be a better approximation to union behaviour. This model requires a two‐part union utility function which changes when a satisfactory (or target) level of the priority variable (e.g. the wage rate) is met. After demonstrating the workings of such a model in a monopoly union framework, it is shown that there is real wage rigidity when the wage is below the target level. Employment increases only when the target wage has been achieved.