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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.

Details

  • Author

    Spinnewyn, Frans Svejnar, Jan

  • Document Date

    1993/03/31

  • Document Type

    Working Paper (Numbered Series)

  • Report Number

    21950

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2020/06/18

  • Disclosure Status

    Disclosed

  • Doc Name

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

  • Keywords

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Citation

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. http://documents.worldbank.org/curated/en/356391468914736116/Worker-power-surplus-sharing-and-the-wage-employment-outcome-in-transitional-economies