Union Power as a Reason for Europe Not to Introduce Experience Rating?

Authors: Baumann, Florian; Stähler, Nikolai

Source: Journal of Institutional and Theoretical Economics JITE, Volume 164, Number 3, September 2008 , pp. 568-585(18)

Publisher: Mohr Siebeck

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Abstract:

Theoretical economic literature dealing with the financing of unemployment insurance finds that experience rating helps to solve the externality caused by individually efficient but socially inefficient dismissals and hence reduces unemployment. This is, however, found in models where workers and firms bargain over wages individually. Introducing unionized wage bargaining - which at least in continental Europe is a defining feature of the economy - may reverse the result. This paper provides an example showing that wage setting by a monopoly union can result in an increase in unemployment.

Document Type: Research article

DOI: http://dx.doi.org/10.1628/093245608785363434

Publication date: 2008-09-01

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Founded as Zeitschrift f�r die gesamte Staatswissenschaft in 1844.

As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.
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