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Wage Bargaining in a Macroeconomic Model with Rationing

Christopher J. Ellis¹; John Fender²

¹ University of Oregon · ² Universities of Oregon and Lancaster, England

A model of a single-commodity, closed economy is constructed in which the commodity price is fixed and its market clears by quantity adjustment. The distinctive feature is that the real wage and employment are determined by bargaining between unions, representing workers and firms. There are several possible regimes, some with labor hoarding. The effects of changes in autonomous spending and the reservation wage on the endogenous variables of the model, including employment and the real wage are discussed. Some interesting possibilities emerge for the cyclical movement of productivity and the real wage.

DOI

10.2307/1884372

Volume

100 (3)

Pages

625

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