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Efficiency wages, unemployment benefits and union-firm wage bargaining: the issue of the choice of the outside option

Wim Meeusen, Vesna Stavrevska and Glenn Rayp UGent (2011) JOURNAL OF LABOR RESEARCH. 32(1). p.75-86
abstract
This paper points out that there may be a logical consistency issue in choosing the reference wage in efficiency wage models. We have shown that defining the outside option in the efficiency wage logic as the market-clearing wage solves this difficulty, and is justifiable in terms of the assumed behaviour of workers and employers. The model that we examine confirms earlier findings of reinforcing effects between union-firm bargaining and efficiency wages. However, if union preferences vary between wages and employment, Summers' reinforcing effect is no longer present for each value of the parameter describing these preferences. Above a certain threshold value of union preferences for employment, the two mechanisms do not reinforce each other anymore.
Please use this url to cite or link to this publication:
author
organization
year
type
journalArticle (original)
publication status
published
subject
keyword
MODEL, Efficiency wages, Wage bargaining, Unemployment benefits, outside option
journal title
JOURNAL OF LABOR RESEARCH
J. Labor Res.
volume
32
issue
1
pages
75 - 86
Web of Science type
Article
Web of Science id
000287860400005
JCR category
INDUSTRIAL RELATIONS & LABOR
JCR impact factor
0.205 (2011)
JCR rank
23/24 (2011)
JCR quartile
4 (2011)
ISSN
0195-3613
DOI
10.1007/s12122-011-9103-z
language
English
UGent publication?
yes
classification
A1
copyright statement
I have transferred the copyright for this publication to the publisher
id
1999870
handle
http://hdl.handle.net/1854/LU-1999870
date created
2012-01-23 12:47:39
date last changed
2015-06-17 09:55:07
@article{1999870,
  abstract     = {This paper points out that there may be a logical consistency issue in choosing the reference wage in efficiency wage models. We have shown that defining the outside option in the efficiency wage logic as the market-clearing wage solves this difficulty, and is justifiable in terms of the assumed behaviour of workers and employers. The model that we examine confirms earlier findings of reinforcing effects between union-firm bargaining and efficiency wages. However, if union preferences vary between wages and employment, Summers' reinforcing effect is no longer present for each value of the parameter describing these preferences. Above a certain threshold value of union preferences for employment, the two mechanisms do not reinforce each other anymore.},
  author       = {Meeusen, Wim and Stavrevska, Vesna and Rayp, Glenn},
  issn         = {0195-3613},
  journal      = {JOURNAL OF LABOR RESEARCH},
  keyword      = {MODEL,Efficiency wages,Wage bargaining,Unemployment benefits,outside option},
  language     = {eng},
  number       = {1},
  pages        = {75--86},
  title        = {Efficiency wages, unemployment benefits and union-firm wage bargaining: the issue of the choice of the outside option},
  url          = {http://dx.doi.org/10.1007/s12122-011-9103-z},
  volume       = {32},
  year         = {2011},
}

Chicago
Meeusen, Wim, Vesna Stavrevska, and Glenn Rayp. 2011. “Efficiency Wages, Unemployment Benefits and Union-firm Wage Bargaining: The Issue of the Choice of the Outside Option.” Journal of Labor Research 32 (1): 75–86.
APA
Meeusen, W., Stavrevska, V., & Rayp, G. (2011). Efficiency wages, unemployment benefits and union-firm wage bargaining: the issue of the choice of the outside option. JOURNAL OF LABOR RESEARCH, 32(1), 75–86.
Vancouver
1.
Meeusen W, Stavrevska V, Rayp G. Efficiency wages, unemployment benefits and union-firm wage bargaining: the issue of the choice of the outside option. JOURNAL OF LABOR RESEARCH. 2011;32(1):75–86.
MLA
Meeusen, Wim, Vesna Stavrevska, and Glenn Rayp. “Efficiency Wages, Unemployment Benefits and Union-firm Wage Bargaining: The Issue of the Choice of the Outside Option.” JOURNAL OF LABOR RESEARCH 32.1 (2011): 75–86. Print.