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Dynamics of Unemployment, Vacancies and Real Wages with Trade Unions
Centre for Labour Economics, London School of Economics.
1985 (English)Report (Other academic)
Abstract [en]

This paper considers the response of wages, unemployment and vacancies to shocks when the number of job slots and real wages are determined by a Nash bargain between a firm and a small union. Unemployment and vacancies co-exist because of search considerations. There is a unique "natural" unemployment rate that ensures that every firm-union's bargained wage is stationary. Shocks that are eventually absorbed by wages cause deviations of unemployment from its natural rate, because the firm-union initial response to a shock is to change vacancies (and possible wages), which cause changes in unemployment flows via the search process.

Place, publisher, year, edition, pages
Stockholm: IIES , 1985. , 32 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 312
National Category
URN: urn:nbn:se:su:diva-41336OAI: diva2:329513
Published in connection with a visit at the IIESAvailable from: 2010-07-12 Created: 2010-07-12 Last updated: 2010-07-12

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