1,721,102 research outputs found
Union-oligopoly sequential bargaining: Trade and industrial policies
No full textThis paper considers the efficacy and the desirability of home government tariff and subsidy policies when labour market structure and asymmetries in the firms' size matter. In a Cournot-Nash duopolistic sector, a unionized home-firm competes against a non-unionized foreign firm. The home firm-union choose wages and employment in a two-stage Nash bargaining game. The second stage corresponds to the Cournot-Nash game with the foreign firm. Firms may play in strategic substitutes or complements. As the home bargainers recognize that market shares are determined by relative marginal costs, they may use the wage stage strategically. Home government policy choices critically depend upon the bargaining structure and general equilibrium spillovers
Are the degree of trade openness and the degree of wage centralisation negatively correlated?
No full textThis paper presents evidence of a negative correlation between the degree of wage centralisation and the degree of trade openness, which is taken as a proxy measures of international trade integration. The sample data cover a macro-panel of 17 OECD countries over the 1975-2000 period. The results are robust to alternative estimation methods and after controlling for the endogeneity of the degree of openness. This contrasts with the existing empirical evidence, based on cross-country macroeconomic data (see Agell, 1999, 2002), suggesting that more open economies have more centralised wage bargaining institutions on average
Product market integration and wage-bargaining institutions
No full textThis paper studies the effects of product market integration on wage bargaining institutions. By considering an international Cournot–Nash oligopoly with unionised home firms and non-unionised foreign firms producing substitute goods, the paper shows that the relative size of the home and foreign markets matters for the effects of a bilateral reduction in trade barriers. If the home market size is relatively larger than the foreign market size, a reduction in trade barriers, by lowering the sharable surplus for home firms and unions in the global market, gives unions incentives to choose more decentralised wage bargaining institutions. This industry-level mechanism, however, works in the opposite direction when the foreign market size is sufficiently large, including the “reciprocal dumping” symmetric market size model. In this case, cutting trade barriers raises the global sharable surplus and encourages domestic wage-setters to choose more centralised institutions
How do Bureaucratic Budget Competition and Collective Bargaining Affect the Share of Temporary Employment?
Get PDFThis paper will present a two–period model in which two bureau–union units, due to the presence of a tenured labour constraint, negotiate sequentially over employment and wages, under the hypotheses that the bureaus maximise output and the sponsor can commit itself to an overall budget. The paper will show that, when both tenured and temporary workers are essential in production, the extent and strength of collective bargaining power of unionised permanent workers, jointly with bureaucratic strategic incentives in budget competition, will determine a sub–optimal allocation of inputs. As a result, strategic over–hiring of permanent workers may emerge in symmetric equilibrium
Protective excise taxation
Get PDFIn a small open economy composed of unionised international Cournot-Nash duopolies, a self-interested government has unilateral incentives to set higher specific domestic excise duties under the destination principle when the typical foreign firm is dominant and the import-competing sector is small. Excise taxes may emerge in political equilibrium when domestic firms and unions lobby for protection and the government is unable to use alternative protective policies because of international agreements. In so far as the government is prepared to exchange tax revenues for political contributions, under some conditions the excise tax rate will be higher than the one chosen without lobbying
Does policy stability increase the Constitutional court’s independence? : the case of Italy during the First Republic (1956-1992)
No full textIn this paper, we consider the sentences of constitutional illegitimacy by the Italian Constitutional Court in the First Republic (1956–1992) as a measure of its independence from politicians. We focus on the Court's incidental review and test whether the Court's independence increases when there is more policy stability, namely when politicians are less able to change the policy status quo by legislation. We follow Tsebelis (2002) in assuming that legislative policy change is less likely when either the number and/or ideological distance of veto players increases. As a proxy for the size of the veto players' Pareto set, we use either the number of parties in government, or the number of parties forming a constitutional majority in Parliament, or the number of effective parties in Parliament, or measures of ideological distance based on Laver and Hunt (1992). By controlling for the Court's degree of internal cohesion, cointegration analysis shows that there is a stable and positive long-run relationship between the Court's independence and proxy measures of the degree of policy stability
Do trade union leaders violate subjective expected utility? Some insights from experimental data
No full textThis paper presents the results of two experiments designed to test violations of Subjective Expected Utility Theory (SEUT) within a sample of Italian trade union delegates and leaders. Subjects priced risky and ambiguous prospects in the domain of gains. Risky prospects were based on games of chance, while ambiguous prospects were built on the standard Ellsberg paradox and on event lotteries whose outcomes were based either on the results of a fictional election or on the future results of the 1999 European Parliamentary election in Italy and the U.K. The experiments show that, although risky prospects were priced at their expected values on average, trade union delegates and leaders did violate SEUT when assessing ambiguous prospects. Moreover, their behaviour depended on the source of uncertainty (Ellsberg paradox vs. electoral results; fictional vs. real election; Italy vs. U.K. election outcomes). We discuss the implications of these results for the economic theory of the trade union
Increasing the substitution elasticity can improve VAT compliance and social welfare
No full textThis paper presents a model of Value Added Tax (VAT) evasion in a monopolistically competitive closed economy. The paper shows that an increase in the intra-brand elasticity of substitution can lower output VAT evasion when under-reporting of final sales and input VAT credits occur jointly. Because of the improvement in VAT compliance, equilibrium prices will fall and VAT revenues will rise both in the short and in the long run. Disentangling the love of variety and the elasticity of substitution utility parameters, it turns out that, in a symmetric general equilibrium solution with free entry and exit of firms, an increase in the substitution elasticity is welfare improving when love of variety is not too strong
Ambiguity and the partisan business cycle
No full textWe introduce ambiguity (Knightian uncertainty) into a stripped-down version of Alesina s (1987) partisan model of the business cycle. We show that, if the private sector s subjective expectations of future events are ambiguous, there is the possibility of a political business cycle, even when the parties running for the election have similar preferences for inflation and unemployment. In particular, if inflation is perceived as a loss, then the larger the fraction of the population that is ambiguity-prone (-averse), the larger is the postelection boom (slump), with unemployment then returning back to its natural level. We also show that, for given parties preferences, ambiguity proneness (aversion) implies smaller (larger) fluctuations in the unemployment around its natural level when the right-wing party wins the elections
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