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Title
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Efficiency wages, unemployment benefits and union : firm wage bargaining : the issue of the choice of the outside option
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Author
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Abstract
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| This paper points out that theremay be a logical consistency issue in choosing the reference wage in efficiency wage models.We have shown that defining the outside option in the efficiencywage logic as themarket-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. |
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Language
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English
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Source (journal)
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Journal of labor research. - Fairfax, Va, 1980, currens
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Publication
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Fairfax, Va
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2011
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ISSN
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0195-3613
[print]
1936-4768
[online]
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DOI
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10.1007/S12122-011-9103-Z
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Volume/pages
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32
:1
(2011)
, p. 75-86
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ISI
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000287860400005
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Full text (Publisher's DOI)
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