By viewing trade unions as economic units analogous to firms, which can be studied by applying the standard tools of microeconomic analysis, this article aims to derive the optimal degree of union centralization in a multi-unions simple general equilibrium model. Differently from previous literature, we show that if the degree of centralization among the labour unions is considered as the outcome of a voting process, full centralization always emerges as equilibrium and standard policy neutrality implications hold. Moreover, the equilibrium represents a Pareto improvement.
AcocellaN.Di BartolomeoG. (2004a). Non-neutrality of monetary policy in policy games. European Journal of Political Economy, 20(3), 695–707.
2.
AcocellaN.Di BartolomeoG. (2004b). Is a conservative central banker a (perfect) substitute for wage coordination?Empirica, 31, 281–294.
3.
AcocellaN.Di BartolomeoG.HibbsD.A. (2008). Labor market regimes and monetary policy. Journal of Macroeconomics, 30(1), 134–156.
4.
AcocellaN.Di BartolomeoG.Hughes-HallettA. (2012). The theory of economic policy in a strategic context. Cambridge: Cambridge University Press.
5.
BarroR.J.GordonD.B. (1983). A positive theory of monetary policy in a natural rate model. Journal of Political Economy, 91(4), 589–610.
6.
BenassiC.ChircoA.ColomboE. (2002). The price index effect and macroeconomic inefficiency. Recherches économiques de Louvain, 68(3), 385–394.
7.
BlanchardO.J.GiavazziF. (2003). Macroeconomic effect of regulation and deregulation in goods and labour markets. The Quarterly Journal of Economics, 118(3), 879–907.
8.
BlanchardO.J.KiyotakiN. (1987). Monopolistic competition and the effects of aggregate demand. American Economic Review, 77(4), 647–666.
9.
BoothA. (1995). The economics of the trade union. Cambridge: Cambridge University Press.
10.
BoyerG.SmithR. (2001). The development of the neoclassical tradition in labor economics. Industrial and Labor Relations Review, 54(2), 199–223.
11.
BratsiotisG.MartinC. (1999). Stabilisation, policy targets and unemployment in imperfectly competitive economies. Scandinavian Journal of Economics, 101(2), 241–256.
12.
CalmforsL. (1993). Centralization of wage bargaining and macroeconomic performance: A survey. OECD Economic Studies No. 21.
13.
CavallariL. (2010). Fiscal and monetary interactions when wage-setters are large: Is there a role for corporatist policies?Empirica, 37(4), 291–309.
14.
CoricelliF.CukiermanA.DalmazzoA. (2004). Economic performance and stabilization policy in a monetary union with imperfect labor and goods’ markets. In Sinn H.W.WidgrenM.KothenburgerM. (Eds), European monetary integration (pp. 3–40). MIT Press.
15.
CoricelliF.CukiermanA.DalmazzoA. (2006). Monetary institutions, monopolistic competition, unionized labor markets and economic performance. Scandinavian Journal of Economics, 108(1), 39–63.
16.
CorneoG. (1997). The theory of the open shop trade union reconsidered. Labour Economics, 4(1), 71–84.
17.
CubittR.P. (1995). Corporatism, monetary policy and macroeconomic performance: A simple game theoretic analysis. Scandinavian Journal of Economics, 97(2), 245–259.
18.
CucinielloV. (2013a). The welfare effect of foreign monetary conservatism with non-atomistic wage setters. Journal of Money, Credit and Banking, 43(8), 1719–1734.
19.
CucinielloV. (2013b). Large labour unions and terms-of-trade externality. Economics Letters, 120(1), 135–138.
20.
CukiermanA. (2004). Monetary institutions, monetary union and unionized labor markets—Some recent developments. In BeetsmaR.FaveroC.MissaleA.MuscatelliV.A.NataleP.P. TirelliP. (Eds), Monetary policy, fiscal policies and labour markets: Key aspects of macroeconomic policymaking in EMU (pp. 299–326). Cambridge: Cambridge University Press.
21.
CukiermanA.DalmazzoA. (2006). Fiscal-monetary policy interactions in the presence of unionized labor markets. International Tax and Public Finance, 13(4), 411–435.
22.
CukiermanA.LippiF. (1999). Central bank independence, centralization of wage bargaining, inflation and unemployment: Theory and some evidence. European Economic Review, 43(7), 1395–1434.
23.
CukiermanA.LippiF. (2001). Labour markets and monetary union: A strategic analysis. The Economic Journal, 111(473), 541–561.
24.
D’AspremontC.FerreiraR.D.S.Gerard-VaretL.A. (1996). On the Dixit–Stiglitz model of monopolistic competition. American Economic Review, 86(3), 623–629.
25.
Di BartolomeoG. (2005). Unions’ inflation aversion and international competitiveness. Journal of Policy Modeling, 27(2), 137–142.
26.
Di BartolomeoG.PauwelsW. (2006). The issue of instability in a simple policy game between the central bank and a representative union. Public Choice, 126(3–4), 275–298.
27.
DixitA.K.StiglitzJ.E. (1993). Monopolistic competition and optimum product diversity: Reply. American Economic Review, 83(5), 302–304.
28.
KaufmanB.E. (2002). Models of union wage determination: What have we learned since Dunlop and Ross?Industrial Relations, 41(1), 110–158.
29.
KlevenH.J.KreinerC.T.DixonH.D. (2002). Dual labour markets and nominal rigidity. Oxford Economic Papers, 54(4), 561–583.
30.
LippiF. (2003). Strategic monetary policy with non-atomistic wage setters. Review of Economic Studies, 70(4), 909–919.
31.
ManningA. (1994). How robust is the microeconomic theory of the trade union?Journal of Labor Economics, 12(3), 430–459.
32.
OswaldA. (1982). The microeconomic theory of the trade union. Economic Journal, 92(367), 576–595.
33.
OswaldA. (1985). The economic theory of trade unions: An introductory survey. Scandinavian Journal of Economics, 87(2), 167–193.
34.
PalokangasT. (2000). Labour unions, public policy, and economic growth. Cambridge: Cambridge University Press.
35.
PalokangasT. (2003). The political economy of collective bargaining. Labor Economics, 10(2), 253–264.
36.
RogoffK. (1985). The optimal degree of commitment to an intermediate monetary target. Quarterly Journal of Economics, 100(4), 1169–1189.
37.
SoskiceD.IversenT. (2000). The non-neutrality of monetary policy with large price or wage setters. Quarterly Journal of Economics, 115(1), 265–284.
38.
YangX.HeijdraB.J. (1993). Monopolistic competition and optimum product diversity: Comment. American Economic Review, 83(1), 295–301.
