Annette, S. Zeilstra, Linda, A Toolsema, University of Groningen, Faculty of Economics, Groningen, The Netherlands
Centralised wage bargaining and regional unemployment (assigned to theme
This paper studies regional labour markets in a country with centralised wage bargaining. We use a four-stage theoretical model with two regions and one sector. In the first stage the union and employer federation engage in Nash bargaining at the national level according to a Right To Manage (RTM) model. In the second stage the individual employers determine the number of employees they want to hire given the outcome of the national wage bargaining. In the third stage individuals decide whether or not they want to migrate to another region and if they want to participate in the labour market or not. In the fourth stage the product market clears. In this model, depending on the parameters, the change in participation and the level of migration determine the distribution of unemployment over the regions.
submitted 2005-04-28 16:57:06.380
final paper
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