Journal of Labor Economics Vol. 4 No. 1 1986
On the Contract Curve: A Test of Alternative Models of Collective Bargaining
Abstract
The traditional model of collective bargaining confines unions to settlements constrained by the employer's labor demand curve, but an alternative model places wage-employment outcomes on a contract curve that extends beyond the labor demand curve. This paper derives a multidimensional (hedonic) contract-curve model in which employment-security provisions are used to maintain efficient bargains outside the employer's demand curve and distinguishes empirically between the contract-curve and demand-constraint models using data for public school teachers in New York State. Estimates clearly support the contract-curve model over the demand-constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment-security provisions.
- DOI
- 10.1086/298094
- Volume
- 4
- Issue
- 1
- Pages
- 66-81
- Language
- en
- Sources
- openalex crossref