Optimum Organization of the Labor Market in a Small Open Economy

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Abstract

In Denmark labor has been organized in independent but cooperating craft unions for more than a century. Within an extremely simple model of a small open economy facing imperfect competition, we analyze four different ways of organizing the labor market and show that the Danish model (partial centralization of the wage setting process) may be accounted for as the outcome of a two-stage Nash bargaining game, being robust in relation to changes in market conditions, and likely close to optimum from the point of view of society as a whole.
Original languageEnglish
JournalLabour Economics
Volume19
Issue number2
Pages (from-to)222-131
Number of pages10
ISSN0927-5371
DOIs
Publication statusPublished - 2012

Keywords

  • Labor Market Organization
  • Wage Bagaining
  • Craft Unions
  • Industrial Cartels

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