Unemployment and the ‘Labour-Management Conspiracy'

Karp, L.S. and Paul, T. (2000) Unemployment and the ‘Labour-Management Conspiracy' The Economic Journal, 110, (460), pp. 113-135. (doi:10.1111/1468-0297.00493).


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We study a model in which management and a union bargain over a rule that will later determine the level of employment, and over a wage. The government then chooses an output or an employment subsidy. An exogenous natural turnover rate in the unionised sector creates unemployment whenever the union wage exceeds the competitive wage. Government intervention can increase both the equilibrium amount of unemployment and worsen the intersectoral allocation of labour, because of the induced change in the endogenous wage. Unemployment weakens but does not eliminate the possibility of a 'labour-management conspiracy'.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1111/1468-0297.00493
ISSNs: 0013-0133 (print)
ePrint ID: 33489
Date :
Date Event
Date Deposited: 19 Jul 2006
Last Modified: 16 Apr 2017 22:15
Further Information:Google Scholar
URI: http://eprints.soton.ac.uk/id/eprint/33489

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