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

labor unions and the adoption of new technology the paper examines whether unionization by workers discourages the adoption of labor saving techniques this is done in the context of an oligopolistic industry with a small number of firms some of which are unionized we find that unionization can actually encourage the adoption of labor saving technology provided that the technological improvement is mild and that demand is sufficiently high or demand elasticity sufficiently low if there is an effective threat of entry that causes the union to moderate its wage demands then unionization may encourage the adoption of new technology even at low levels of demand

the changing size distribution of u s trade unions and its description by pareto s distribution the size distribution of trade unions in the united states and changes in this distribution are documented because the most profound changes are taking place among very large unions these are subject to special analysis by invoking pareto s distribution this represents a new application of this distribution extensions to trade union wealth and to britain are broached the role of the public sector in these changes receives particular attention a simple model helps account both for the logarithmic distribution of union membership and for the contrasting experiences of public and private sector unions since the 1970s

unionisation structures and innovation incentives this paper examines how dierent unionisation structures aect rms innovation incen tives and industry employment we distinguish three modes of unionisation with increasing degree of centralisation 1 decentralisation where wages are determined independently at the rm level 2 coordination where one industry union sets individual wages for all rms and 3 centralisation where an industry union sets a uniform wage rate for all rms while rms investment incentives are largest under centralisation investment in centives are non monotone in the degree of centralisation decentralisation carries higher investment incentives than coordination labour market policy can spur innovation by decentralising unionisation structures or through non discrimination rules

analysis of wage flexibility across the euro area evidence from the process of convergence of the labour income share ratio this article analyses wage flexibility as a factor in the unemployment rate across 12 euro area countries we use extensive evidence pertaining to the countercyclical behaviour of the labour income share ratio to estimate its equilibrium value in the long run this measure is calculated using a hybrid new keynesian phillips curve additionally by using spatial econometrics we can incorporate into the study the interdependence in the inflation among the countries as a result we identify countries that might see an improvement in their employment rates by improving their wage flexibility we also identify countries with high unemployment that is not a consequence of a lack of wage flexibility

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

the creation and capture of rents wages and innovation in a panel of u k companies this paper examines the impact of technological innovation on wages using a panel of british firms a head count measure of major innovations between 1945 and 1983 is combined with share price and accounting information innovating firms are found to have higher average wages but rival innovation tends to depress own wages this appears consistent with a model where wages are partly determined by a sharing in the rents generated by innovation in other words innovation may be a good instrument for proxies for rents such as profitability quasi rents or tobin s average q instrumental variable estimates of the elasticity between wages and quasi rents are about 0 29

unionised labour market and strategic production decision of a multinational i show that a foreign firm may sell the same product through both foreign direct investment fdi and export and this decision depends on the size of the product market it happens irrespective of whether the labour market in the domestic country or in the foreign country is unionised unlike the existing works focusing on risk diversification in presence of demand or cost uncertainty i explain the co existence of fdi and export in a world with certainty the endogenous determination of the wage rate plays an important role for my results my analysis shows the effects of the fixed cost of fdi and competition in the product market on the production strategy of the foreign firm

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

pay and employment determination in britain what are labour contracts really like the recent growth of unemployment in western economies has prompted new research on the workings of the labour market there has been much interest in particular in the questions what determines the level of real pay and why is it apparently so insensitive to changes in aggregate demand and unemployment european economists now find it hard to take seriously the notion still taught to many undergraduate that wages are determined by the intersection of demand and supply curves roughly half of all british employees belong to trade unions a much higher percentage have their pay fixed by some kind of collective bargain in this country it is negotiations not impersonal com petitive markets which decide what most of us will be paid the difficult problem is that of how to understand this process or to put it differently of how to think up the right model of the world

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

labour union entry and consumer welfare abstract it is usually believed that the presence of a labour union makes firms as well as consumers worse off by increasing wages compared to the situation with no labour union we show that the presence of a labour union may increase the incentive for entry and may also make consumers better off compared to the situation with no labour union if the labour productivity of the entrant is sufficiently higher to that of the incumbent

concentration trends in union structure an international comparison the structure of unionism in nine western countries became on the whole more concentrated during the two decades 1957 58 to 1977 78 as indicated by a reduction in the number of national unions affiliated with major federations and an increase in the relative size of the largest unions the reasons for the trend which has implications for the internal life of unions and for collective bargaining are linked to the efforts of unions to adapt their structure to changes in the environments in which they operate often reinforced by pro merger pressures from the central labor federations the trend toward greater concentration may be expected to continue especially in countries in which the major trade union federations are still composed of substantial numbers of affiliated unions

trade unions investment and employment the implications of long term wage contracts and investment in capital on non cooperative wage bargaining between a firm and a union are analysed the union maximises a utilitarian utility function and the firm faces a neoclassical investment problem with internal adjustment costs the monopoly union outcomes with binding contracts is time inconsistent because the union has an incentive to renege on announced low wage strategies once the capital stock has been accumulated the monopoly union outcome without binding contracts leads to credible strategies which correspond to higher wages and lower levels of employment investment and the capital stock efficient contracts give rise to higher employment than monopoly union outcomes whether with or without long term wage contracts the results are illustrated with a numerical example finally when the game between the union and firm is repeated reputational equilibira provide a solution to the problem of time inconsistency

labour market institutions and economic performance labour markets richard freeman do particular types of labour market institution hold the key to economic success should other countries try to emulate the flexibility of the american labour market or the centralization of swedish style corporatism since 1970 within the oecd there has been a sharp divergence both of economic performance and of indicators of labour market structure the paper uses union density and the degree of wage dispersion across industries to proxy a country s underlying labour market institutions in assessing economic performance it is argued that cross country differences in output growth were much smaller than differences in employment growth for given output growth there is a clear negative relationship between employment growth and real wage growth across countries why do different countries find themselves at different points on this trade off the final part of the paper examines the correlation between indicators of labour market structure and the position on the wage employment trade off it concludes that the degree of wage dispersion across industries is the most important indicator of market structure and that countries with very high or very low dispersion typically the countries with highly centralized or highly decentralized bargaining in the labour market have better employment performance than countries with intermediate degrees of centralization and wage dispersion

information and the hold up problem we examine situations in which a party must make a sunk investment prior to contracting with a second party to purchase an essential complementary input we study how the resulting hold up problem is affected by the seller s information about the investing party s likely returns from its investment our principal focus is on the effects of the investment s being observable by the non investing party contrary to popular intuition we find that an improvement in the seller s information e g the investment s being observable rather than not can benefit the buyer and harm the seller we also find that other popular intuitions about this problem are either false incomplete or require strong assumptions to be valid

incentive compatibility in signaling games with a continuum of types on donne deux resultats utiles pour demontrer l existence et pour caracteriser des equilibres de separation dans des jeux de signalement

does africa need a rotten kin theorem experimental evidence from village economies this paper measures the economic impact of social pressure to share income with kin and neighbors in rural kenyan villages the authors conduct a lab experiment in which they randomly vary the observability of investment returns the goal is to test whether subjects reduce their income in order to keep it hidden the analysis finds that women adopt an investment strategy that conceals the size of their initial endowment in the experiment although that strategy reduces their expected earnings this effect is largest among women with relatives attending the experiment parameter estimates suggest that women behave as though they expect to be pressured to share four percent of their observable income with others and substantially more when close kin can observe income directly although this paper provides experimental evidence from a single african country observational studies suggest that similar pressure from kin may be prevalent in many rural areas throughout sub saharan africa

a strategic altruism model in which ricardian equivalence does not hold this article demonstrates that ricardian equivalence does not necessarily hold in models with altruistic transfers once one takes into account the strategic behavior of recipients as well as donors to influence the final allocation of consumption in altruistic settings potential recipients can threaten to refuse transfers the authors apply the extended nash bargaining solution to the problem of an altruistic parent and a possible altruistic child they show that when the government redistributes between the parent and child it changes their endowments and the equilibrium threats and thus the final allocation of consumption copyright 1990 by royal economic society

motives for household private transfers in burkina faso abstract resource transfers among households have received considerable interest among economists in recent years two of the main reasons for the surge of interest in household transfers are the information on human nature conveyed by transfer behavior and the implication on income redistribution policy that private transfer might have empirical studies however provide mixed results on transfer behavior this is because previous inquiries were confronted with several estimation issues and have focused on data from developed countries where private transfers are already small this paper contributes to the literature on transfer behavior by using a multifaceted econometric approach to examine the motives of household transfers in burkina a low income country with a well documented tradition of gift exchanges the findings suggest that risk sharing is not central to transfers altruistic transfers are apparent for the middle income class but not at low income level the evidence implies that crowding out may be minimal at low income level suggesting that public transfers targeting poor households may be effective

the incentives for cost reduction in a differentiated industry abstract this paper investigates how the incentives for cost reduction in a differentiated industry depend upon the degree of product substitutability when goods are imperfect substitutes both cournot and bertrand competition result in underinvestment in the sense that a social planner would be willing to pay more for a given cost reduction than a profit maximizing firm overinvestment may occur when the goods are sufficiently close substitutes similarly cournot competition provides a stronger incentive to innovate than bertrand competition if the degree of substitutability is low and a weaker incentive if this degree is high

employment protection and industry innovation we examine the impact of the strictness of employment protection legislation epl on innovation intensity to this purpose we use a panel of annual data from organisation for economic co operation and development countries and analyze the variation of innovation intensity within country between industries our estimates indicate that stricter epl led to significantly lower innovation intensity in industries with higher job layoff propensity our findings are robust to additional industry covariates and other labor market institutions that may affect innovation performance and industry job layoff propensity

union rent seeking intangible capital and market value of the firm abstract this study considers the effect of unions on intangi ble capital investment and profitability within the context of a market value rather than a more traditional accounting based approach theory is provided suggesting unions are able to affect profitability by sharing in the economic returns to firm specific intangible capital in support of this hypothesis we find unionization reduces the returns to r d and produces a corresponding limiting influence on r d investment at the firm level i introduction a n extensive literature in economics has ex amined the determinants of profitability with much of the focus centering on the role of market structure only recently however have the effects of labor unions on profitability been analyzed ths is surprising since labor economists long have emphasized union influences on wages and productivity that in turn may affect profitabil ity in recent studies freeman 1983 and karier 1985 report a significant limiting influence of unions on price cost margins in high concentra tion manufacturing industries using firm level data and the market based tobin s

government incentives when pollution permits are durable goods this paper analyzes the incentive effects of pollution taxes versus pollution permits for a budget oriented government pollution permits are analyzed as durable goods and a pollution tax is seen as being equivalent to leasing out pollution permits first a general model is developed and then four stylized types of government are discussed a benevolent dictator a pure leviathan a green and a business friendly government we show that all types of government prefer a pollution tax system but this regime is not necessarily the best in social welfare terms the intuition is that a tax or leasing system makes it easier for the government to credibly commit to the budget maximizing level of pollution permits which is good for government revenues but not necessarily for social welfare

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

top incomes in the long run of history a recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics top incomes represent a small share of the population but a very significant share of total income and total taxes paid hence aggregate economic growth per capita and gini inequality indexes are sensitive to excluding or including top incomes we discuss the estimation methods and issues that arise when constructing top income share series including income definition and comparability over time and across countries tax avoidance and tax evasion we provide a summary of the key empirical findings most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks top income shares do not recover in the immediate postwar decades however over the last thirty years top income shares have increased substantially in english speaking countries and in india and china but not in continental european countries or japan this increase is due in part to an unprecedented surge in top wage incomes as a result wage income comprises a larger fraction of top incomes than in the past finally we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open

asymmetry of information within family networks this paper studies asymmetry of information and transfers within a unique data set of 712 extended family networks from tanzania using cross reports on asset holdings we construct measures of misperception of income among all pairs of households belonging to the same network we show that there is significant asymmetry of information and no evidence of major systematic over evaluation or under evaluation of income in our data although there is a slight over evaluation on the part of migrants regarding non migrants we develop a static model of asymmetric information that contrasts altruism pressure and exchange as motives to transfer the model makes predictions about the correlations between misperceptions and transfers under these competing explanations testing these predictions in the data uncovers the active role played by the recipient our findings suggest that the recipient sets the terms of the transfers either by exerting pressure to give on the donor or by holding the bargaining power during the exchange of services with the donor

wage setting institutions and pay inequality in advanced industrial societies the distribution of pay differs significantly across countries and over time among advanced industrial societies in this paper institutional and political determinants of pay inequality are studied in sixteen countries from 1980 to 1992 the most important factor in explaining pay dispersion is the level of wage setting i e whether wages are set at the level of the individual the plant the industry or the entire private sector the impact of centralization is the same whether centralization occurs via collective bargaining or via government involvement in private sector wage setting the concentration of unions and the share of the labor force covered by collective bargaining agreements also matter after controlling for wage setting institutions other variables such as the governing coalition the size of government international openness and the supply of highly educated workers have little impact economic political and norm based explanations for the association of centralization with egalitarian outcomes are discussed

the determination of r d empirical evidence on the role of unions abstract this paper examines the empirical evidence of the role of union bargaining on innovation we review the existing empirical evidence and emphasis some of the problems with the theoretical assumptions we outline a simple model of strategic rd b the union bargains only over wages

two sided altruism and signaling abstract when donors and recipients care about each other two sided altruism asymmetry of information about the donor s income or about the donor s altruism leads naturally to a signaling game the desire to signal income or altruism puts upward pressure on transfers

don t tell on me experimental evidence of asymmetric information in transnational households although most theoretical models of household decision making assume perfect information empirical studies suggest that information asymmetries can have large impacts on resource allocation i demonstrate the importance of these asymmetries in transnational households where physical distance between family members can make information barriers especially acute i implement an experiment among migrants in washington dc and their families in el salvador that examines how information asymmetries can have strategic and inadvertent impacts on remittance decisions migrants make an incentivized decision over how much of a cash windfall to remit and recipients decide how they will spend a remittance migrants strategically send home less when their choice is not revealed to recipients recipients make spending choices closer to migrants preferences when the migrants preferences are shared regardless of whether or not the spending choices are revealed to the migrants suggesting that recipients choices are inadvertently affected by imperfect information

labour markets and innovation ex post bargaining abstract there is considerable interest in how labour market conditions affect innovation lying behind much of the existing work on this question is a simple model of a single union bargaining with a single firm in which in the absence of binding contracts the union reduces the returns to innovation without bearing any of the costs this misses an important feature of some rd with efficient contracts there are cases where being faced with a stronger union will help a firm to win a patent race it would otherwise have lost

imperfect commitment altruism and the family evidence from transfer behavior in low income rural areas in this paper we examine empirically whether risk pooling is more advantageous among altruistic compared to selfish agents in a framework where individuals cannot make binding commitments in particular we incorporate altuism into a model of risk sharing under imperfect commitment and use simulation methods to establish tests of the roles of both altruism and commitment problems in determining the extent of insurance and the intertemporal movements in interhousehold transfers the tests are carried out using three panel data sets from two countries of rural south asia that provide detailed information on transfers and enable the measurement of income shocks the estimates provide strong support for the notion that imperfect commitment substantially constrains informal transfer arrangements whether kin based or not but also provide evidence that altruism plays an important role in ameliorating commitment constraints and thus in increasing the gains from income pooling

unionization incomplete contracting and capital investment this article examines empirically the hypothesis that incomplete contracts and resulting opportunistic behavior over the return to sunk assets reduces investment union firm contracts are incomplete because they 1 do not prevent all actions aimed at changing the existing contract 2 cover a relatively short time period and 3 do not extend to union members yet to be hired the primary response of firms is to reduce investment in specific durable assets and also to reduce employment growth and increase debt the authors find fairly strong evidence of these effects in a sample of large publicly traded firms using firm specific measures of unionization copyright 1993 by university of chicago press

is labour market flexibility harmful to innovation in a neoclassical framework one can argue that unemployment can be reduced by means of institutional changes that allow for a better working of the labour market and notably by achieving downward wage flexibility i argue that although various policy recommendations about removing labour market rigidities are indeed advantageous in the short trun they are detrimental from a schumpeterian perspective since they discourage product and process innovation reduced innovation efforts will in turn weaken the supply side strength of an economy the paper explores the implications of schumpeter s notion of creative destruction and of schmookler s hypothesis of demand pulled innovations borrowing from recent empirical innovation research

lobbying for minimum wages using a common agency lobbying framework this paper illustrates how the minimum wage set reflects the interaction between economic and political factors and under what circumstances will the policymaker be induced through lobbying to change the minimum wage specifically when the labor demand elasticity is large lobbying is successful in inducing the policymaker to set the minimum wage in accordance with her political ideology however the paper also shows the conditions under which lobbying will reverse the ideological preference and induce a business friendly government to increase the minimum wage empirical analysis on a panel data for ten canadian provinces gives considerable support for theoretical predictions the real minimum wage decreases in skill adjusted union density and political ideology while larger labor demand elasticity reinforces the influence of political ideology in the presence of lobbying jel j38 d72 d78

a signaling explanation for charity this article examines a novel but plausible motive for charitable giving charitable donations which are observable can signal wealth or income the signaling equilibrium of charitable donations has attractive properties donations increase proportionally with population size governmental funding for public goods affects private charity only through an income effect crowding out need not be complete income redistribution is generically nonneutral increasing the spread between the poorest and richest person in a community tends to increase private donations our theory are based on the assumption that people are willing to make charitable donations even if they will not increase provision of the public good the data on charitable giving support the hypothesis that donors donate at least partly for signaling purposes rather than only to aid the recipient or to obtain satisfactions unrelated to status though charitable organizations usually report donations within categories thus not allowing perfect revelation for analytical tractability we shall consider an equilibrium with perfect revelation and a continuum of types as characterized in george j mailath 1987 and norman j ireland 1994

the rise and fall of unions the public sector and the private as of the late 1980s american unionism as a whole has been in decline for about thirty years this decline has been concentrated in the unions serving workers in the private sector and contrasts sharply with the growth of public sector unions during much of the same period this paper attempts to explain these divergent trends but takes their existence as given by decline or rise of unionism i refer to changes in the percentage relative number of union adherents among a specified group of workers though i believe that movements in the relative number of union adherents have run parallel to broader but more vague movements of union influence the reader must draw such inferences for himself as best he can a union adherent is assumed to be both a dues payer and covered by a collective bargaining contract possible differences between these two concepts of union affiliation are unimportant for this paper individuals are assumed always to act as if they had compared the costs and benefits of union adherence and chosen adherence if the benefits were greater and otherwise if the opposite applied as used here costs and benefits are limited to hourly compensation wages and fringes employment opportunities and working conditions while ideological preferences undoubtedly influence a small minority of workers it is assumed that such individuals are too few to affect the trends analysed 1 the above assumptions obscure important interdependencies among the decisions of individual workers and those of an employee and his employer for example if an 1i do not deny either that changes in attitudes toward the relative desirability of working under union conditions may have occurred from time to time or that such changes might be of interest however i assume that the dominant factors affecting movements in the quantity of union adherents are changes in the benefits and costs of unionization particularly hourly compensation and employment opportunities

social norms and gift behavior theory and evidence from romania in many developing and transitional countries with limited public income redistribution inter household transfers in general and gifts in particular are sizable and very important we use unique romanian survey data that enables us to isolate pure gifts from other private transfers we explicitly focus on the importance of community wide social norms and find that they indeed play a major role for both the occurrence and the values of gifts more exactly our results suggest that the overall predominant gift motive among romanian households is a norm of reciprocity moreover this norm seems to be dominating for gifts to middle and high income households even though poor households receive to the same extent norms of both impure altruism and reciprocity tend to be important hence although the poor may not reciprocate gifts to the same extent as the rich they still receive since there is a social norm to give especially to the poor

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

union effects on productivity profits and growth has the long run arrived this article interprets literature examining union effects on economic performance production function studies indicate small overall union impacts on productivity positive effects where they exist appear to result from management response to decreased profit expectations and from a natural selection process lower profitability among unionized firms is well established more interesting is the possibility that unions appropriate quasi rents deriving from long lived tangible and intangible capital the connection between unions investment behavior and productivity growth emerges as a particularly fruitful line of empirical inquiry although it does not encourage a sanguine view of unionism s long run impact

labour markets bargaining and innovation much of the recent empirical work on the impact of unions on rd ii under some circumstances an increase in union strength can make both firms and unions worse off we survey a more recent theoretical literature which takes account of the fact that r d is often undertaken for strategic reasons by firms that are in competition with one another we show that in this framework the prevailing theoretical paradigm may be overturned thus when firms and unions can enter into long term bargains then an increase in union strength will increase decrease r d spending if successful innovation causes employment to rise respectively fall however when r d falls then this increase in union strength can cause both firms and unions to be better off when firms and unions engage in short term bargaining then an increase in union bargaining strength will cause r d to fall when bargaining is over wages alone however when bargaining takes place over wages and employment then if unions care a lot about employment the relationship between union strength and r d is inverse u shaped

on the benefits from rigid labour markets norms market failures and social insurance the common view that far reaching labour market deregulation is the only remedy for high european unemployment is too simplistic first the evidence suggests that deeply rooted social customs are

networks of knowledge among unionized firms we develop a model of strategic networks in order to analyze how trade unions will affect the stability of r d networks through which knowledge is transmitted in an oligopolistic industry whenever firms settle wages the partially connected network is likely to emerge in the long run if and only if knowledge spillovers are large enough however when unions settle wages the complete network is the unique stable network in other words the stronger the union bargaining power is the more symmetric stable r d networks will be in terms of network efficiency the partially connected network when firms settle wages does not pareto dominate the complete network when unions settle wages and vice versa