Wage and employment determination in unionized labour markets with an application to greek manufacturing

Abstract

The present thesis synthesizes and extends some of the recent developments in unemployment theory and attempts to explain the experience of Greek manufacturing in terms of those developments. The first chapter surveys the relevant literature and serves as an introduction to the thesis. The second chapter of the thesis reexamines and extends some of the main theoretical models of the trade union literature namely the labour demand models, the efficient bargaining model, and the sequential bargaining model. The third chapter examines the theoretical implications of an insiders-outsiders model for the dynamic evolution of wages and employment. To study this theory I examine an array of labour market situations in the context of a dynamic monopoly union model. Chapter four, investigates empirically employment persistence and wage determination in GreeK manufacturing. Three, sources of persistence employment are examined: dynamics in union’s membership rules, insiders wage aspirations and adjustment costs in firm’s behaviour. The last chapter extends the empirical analysis investigating output and price determination in Greek manufacturing. The empirical findings of the above analysis show that output and prices in Greekmanufacturing depend significantly on the international competitiveness of the sector and the relative oil price, while wage setting and employment hysteresis can be attributed to the structural rigidities ofthe Greek labour market.