Skip to Main Navigation

Worker power, surplus sharing, and the wage-employment outcome in transitional economies (English)

There is now a large literature dealing with wage-employment outcomes in unionized and labor-managed firms. Some strands of this literature argue that worker power leads to inefficient allocation of resources. In the context of the transitional economies, some writers have cogently argued that, as central controls are lifted, workers are able to exert significant control over enterprise decisionmaking and affect negatively the economic performance of firms. With unemployment rising to a two digit level in most transitional economies, the distinction between worker-insiders, who are insulated and co-determine the policies of the firms, and worker outsiders, who would like to enter the firms, should become a focal point of the analysis. In this paper, the authors re-examine the theoretical premises underlying the literature on unions and labor-managed firms and draw conclusions with respect to the transitional economies. This paper's format is as follows: Section 2 shows that fixing wage differentials coordinates the interests of insiders and the newly admitted outsiders; the authors then analyze its distributive effects. Section 3 presents the results of a non-cooperative dynamic union-monopoly model of bargaining between the union and the management both for the closed and open union shop. Section 4 analyzes the possibilities of cooperation in determining the wage bill when the non-cooperative outcome is used for deriving the disagreement payoffs should the cooperation fail.


  • Author

    Spinnewyn, Frans Svejnar, Jan

  • Document Date


  • Document Type

    Working Paper (Numbered Series)

  • Report Number


  • Volume No


  • Total Volume(s)


  • Country


  • Region

    The World Region,

  • Disclosure Date


  • Disclosure Status


  • Doc Name

    Worker power, surplus sharing, and the wage-employment outcome in transitional economies

  • Keywords

    united states agency for international development;wage differential;marginal product of labor;inefficient allocation of resource;department of economics;stationary state;Wage Bill;lifetime income;lifetime employment;average wage;rent seeking activity;marginal revenue product;total wage bill;point of departure;inflow of workers;free trade union;Conflict Resolution;high wage;full employment;participation constraint;base wage;transitional economy;union membership;efficient outcome;indifference curve;wage growth;uniform wage;cooperative equilibria;high employment;noncooperative game;demand curve;monopoly model;bargaining position;interest cost;union shop;enterprise behavior;productive worker;steady state;profit maximizing;present value;dynamic model;general equilibrium;production function;partial equilibrium;transition period;cooperative effort;competitive market;bargaining power;transfer payment;price response;labor demand;initial value;consumption smoothing;perfect equilibrium;foreign trade;catholic university;partial integration;expansionary policy;differential equation;unemployment risk;efficiency gain;institutional environment;industrial economics;empirical evidence;cooperative bargaining;bargaining model;optimal policy;binding constraint;efficiency loss;majority voting;central control;positive production;macroeconomic problem;voluntary unemployment;competitive force;paid worker;discount rate;life insurance;increasing function;average product;management control;feasibility constraint;work force;competitive level;admission rate;increasing wage;financial wealth;retained earnings;optimal choice;wage setting;take time;utility function;research initiative;future value;upper bind;consumption level;cooperative solution;durable good;contract curve;



Official version of document (may contain signatures, etc)

  • Official PDF
  • TXT*
  • Total Downloads** :
  • Download Stats
  • *The text version is uncorrected OCR text and is included solely to benefit users with slow connectivity.


Spinnewyn, Frans Svejnar, Jan

Worker power, surplus sharing, and the wage-employment outcome in transitional economies (English). Research paper series (RPS),EE-RPS 19. Eastern Europe and FSU series Washington, D.C. : World Bank Group.