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- Title
Optimal Wage Bargains.
- Authors
Bean, Charles R.
- Abstract
This article focuses on the nature of wage-employment agreements between firms and workers. Workers are in general unable to purchase insurance against future income fluctuations on grounds of, for example, moral hazard, and consequently firms may find it profitable to offer workers a contract that provides them with partial insurance as well as employment compensation. Under the optimal wage bargain, possible states of the world fall into three groups. In some there is excess demand for labour and the wage is invariant across these states. This wage is also the maximum paid in any state. In another,possibly null, set there is ex post involuntary unemployment, and, under certain assumptions about the revenue function facing the firm, the wage is also invariant across these states.
- Subjects
WAGES; INCOME; LABOR contracts; EMPLOYMENT; UNEMPLOYMENT; LABOR market; LABOR disputes; COLLECTIVE bargaining
- Publication
Economica, 1984, Vol 51, Issue 202, p141
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2554206