mexico and the brady plan mexico has throughout the 1980s been centre stage in the debates and events shaping the sovereign debt problem caught between a sudden collapse of its terms of trade and rising world interest rates mexico suspended debt service payments in august 1982 and ushered in what has since become known as the debt crisis in the following years lending to ldcs dried up and debtor countries were increasingly forced to run high trade surpluses to effect ever growing transfers from poor back to rich countries in the face of falling growth rates and rising inflation in the high debt countries then secretary of the treasury baker proposed the baker plan in return for economic reforms high debt countries would get new access to medium term new loans in addition to rolling over of amortization of old loans new loans had to come both from commercial creditors and the official lending institutions with access to capital markets restored the economic reforms would it was hoped allow the debtors to grow out of debt but experience in the high debt countries showed that the original hopes of the proponents of the baker plan went unfulfilled net transfers out of the borrowing countries went up rather than down as

classical unemployment accommodation policies and the adjustment of real wages a model of wage formation and stabilization policy in economies with strong trade unions is developed the analysis provides a theoretical underpinning for the assertion that accommodation policies may cause wage inflation and ultimately reduce employment various methods of accomplishing a real wage adjustment are discussed i a policy of complete nonaccommodation 2 continued accommodation policies but with lower employment targets 3 social contracts and 4 tax based incomes policies tip

macroeconomic performance and collective bargaining an international perspective this paper critically reviews the research on how collective bargaining systems influence macroeconomic performance in industrialized countries the review considers effects of bargaining level coordination and corporatist institutional arrangements key empirical results turn out to be quite fragile and much of the paper explores issues of measurement and specification that account for the fragility the paper concludes that complementarities between key institutions and between institutions and the economic environment may be more important for macroeconomic performance than the effects of individual institutions and it suggests research strategies

insiders and outsiders in wage determination a firm starts with a group of insiders or seasoned workers there is also a large pool of outsiders who are initially less productive but are transformed into insiders after one period of employment the firm gains from having a large pool of insiders some of whom may be laid off in bad years insiders gain from keeping their numbers small if the insiders set their wage unilaterally they will choose a path that in this extreme case prevents employment of outsiders even if future employment prospects are good if the wage path is set by bilateral bargaining the extra advantage to the firm permits employment of some outsiders in some situations

counterinflationary policy in a unionised economy with nonsynchronised wage setting a model of the determination of wages and employment in a unionised economy with nonsynchronised wage setting is presented in this paper it is shown that a monetary deflation can lead to prolonged unemployment even though the unions act rationally and with full information about the change in policy the model generates a statistical phillips curve in which the rate of change of money wages depends on the anticipated growth rate of the money supply and on disequilibrium unemployment conventional incomes policies are shown to have desirable social effects but run counter to the perceived self interest of the trade unions and are therefore likely to be resisted taxes on wage increases have desirable long run effects but do not appear able to reduce the transitional unemployment costs of monetary deflation

cooperation harassment and involuntary unemployment an insider outsider approach the authors present a theory of involuntary unemployment which explains why the unemployed workers outsiders are unable or unwilling to find jobs even though they are prepared to work for less than the prevailing wages of incumbent workers in siders the outsiders do not underbid the insiders since were the y to do so the insiders would withdraw cooperation from them making their work unpleasant with harassment and thereby reducing the prod uctivity and increasing the reservation wages of the underbidders th e resulting labor turnover costs create economic rent which the insid ers tap in wage setting and as a result involuntary unemployment ma y arise copyright 1988 by american economic association

employment policies wage formation and trade union behavior in a small open economy a model of trade union determined wages is developed which provides an explanation of underemployment based on optimizing behavior it is shown that fiscal policy will in general affect employment under perfect foresight and immediate wage flexibility future consequences of short run stabilization policies are discussed ratchet effects with respect to government expenditure and game theoretic interdependence between government and trade union behavior are emphasized if the trade union takes short run policy measures in order to increase employment as an indication of an employment stabilization rule the future behavior of the trade union changes and the result may be a decrease in long run employment

against the wind bargaining recentralisation and wage inequality in norway 1987 91 in the late 1980s norway s labour market experienced similar supply and demand shifts for skills to other countries but unlike other oecd nations norway s wage setting system became more centralised the pay distribution in norway became more compressed at the bottom from 1987 to 1991 while low wage workers in other countries lost ground relatively using norwegian microdata for 1987 and 1991 i found that changing labour market prices helped cause this wage compression further the less educated had declining relative overall employment but increasing relative public sector employment both possible labour market responses to the wage compression

the decentralization of collective bargaining a literature review and comparative analysis the author reviews evidence that the bargaining structure is becoming more decentralized in sweden australia the former west germany italy the united kingdom and the united states although in

the measurement of waste within the production sector of an open economy a methodology for measuring the loss of output that can be attributed to distortions within the production sector of an open economy is proposed examples of distortions are tariffs on imported intermediate inputs taxes or subsidies on exports specific taxes on an output that is used as an input by another industry nonneutral corporate income taxes interindustry monopolistic markup pricing and union induced wage differentials the methodology generalizes the earlier work of allais and debreu

job security work incentives and unemployment this paper analyzes how firms can use job security as an incentive mechanism the author examines how macroeconomic job security measured by the reemployment probability may affect productivity differently from microeconomic job security measured by the probability of being retained the authors describe the circumstances under which job security stimulates work effort then incumbent workers insiders may have an opportunity to raise their wages above the market clearing level without being replaced by unemployed workers outsiders in this context involuntary unemployment can arise copyright 1988 by the editors of the scandinavian journal of economics

the dynamics of trade unionism and national economic performance i test two theories of the political processes of trade unions the first argues that wage moderation depends on a centralized labor movement the second contends that institutional conditions permitting unions coordination of bargaining strategies is sufficient coordination is most likely to he achieved when there are small number of unions that do not compete for members that is when union monopoly is high important empirical anomalies may be resolved by analyzing the effects of union centralization and monopoly separately rather than combining them into a composite index of corporatism reanalyzing comparative data from organization of economic cooperation and development countries between 1963 and 1985 largely corroborates the hypothesis that monopoly is more important than either centralization or composite indices of corporatism for national economic performance the conceptual rationale underlying indices of corporatism should be reexamined

cumulative effects of labor market distortions in a developing country abstract this paper considers a small open economy with an input output industrial structure that creates vertical linkages and multiple equilibria an imperfect labor market is introduced by assuming unionized labor it is shown that a deregulation of the labor market may trigger a large discontinuous expansion of industrial output as reduced wage costs start a circular cumulative process in which expansions of the up and downstream industries promote each other centralization of collective bargaining may however also be conducive to industrialization

worker substitutability and patterns of unionisation a strategic three party bargaining model is developed in which one distinguished party the firm has to reac h agreements with the other two each of which is a group of workers in the prebargaining stage the two worker groups decide whether to organize jointly or separately the main observation relates the equi librium pattern of unionization to the substitutability in production between the two groups the outcome is joint or separate unions acco rding to whether the two groups are substitute or complementary facto rs of production the analysis also considers possibilities for firm s strategic intervention in the unionization process copyright 1988 by royal economic society

unions employers associations and wage setting institutions in northern and central europe 1950 1992 the eight countries examined in this study austria belgium denmark finland germany the netherlands norway and sweden have long been viewed as exemplifying corporatist industrial relations

centralisation employment and wage dispersion this paper is about bargaining institutions and their influence on wage dispersion and employment using novel statistical measures it compares labor market performance in seventeen oecd countries since 1973 it concludes that countries with highly centralized wage bargaining have generally achieved the best performance combining high employment with low wage dispersion thereby avoiding certain major inequalities prevalent elsewhere the paper also presents a formal model of bargaining based on the work of l calmfors and j driffill 1988 simulations are used to illustrate how this model generates the kind of outcomes described in the empirical part of the paper copyright 1992 by royal economic society

wage dispersion and productive efficiency evidence for sweden the swedish record of enormous compression of relative wages under centralized solidarity bargaining followed by substantial decompression of wages after central bargaining broke down supplies observations well suited to empirical evaluation of arguments about the response of productive efficiency to shifts in wage distribution we obtain no results supporting fairness morale and cohesiveness theories implying that wage leveling within workplaces and industries may enhance productivity reduction of interindustry wage differentials evidently did however contribute positively to aggregate output and productivity growth most likely for the structural reasons first emphasized by swedish trade union economists almost a half century ago

union egalitarianism as income insurance it is a common observation that unions often try to compress the wage distribution among their members as compared with the productivity distribution a troublesome aspect of standard theories of redistributive unions is the question why high productivity workers choose to enter the union in the first place this paper develops and explores the implications of an alternative insurance rationale for egalitarian wage objectives apart from providing a simple explanation of why heterogeneous union members may agree on egalitarian wage policies it also suggests a more guarded attitude toward the welfare costs of pay compression copyright 1992 by the london school of economics and political science