The usual 'efficient' bargaining solution between a monopolistic firm and a union has always been derived under the constraint that the firm produces on its production frontier. The authors show that, if the union is risk-averse and powerful enough, this constrained efficient bargaining solution...

Governments set numerous norms to protect consumers. Two countries may achieve the same level of protection of their consumers through different specifications. The adaptation costs induced by these differences create barriers to trade. The principle of mutual recognition addresses the problem...

We exploit the common features of models such as union-firm wage bargaining, search and efficiency wage models to develop a framework that can be used for analyzing the effects of any budget-neutral tax reform on employment in these models. We show that taxes paid by workers are not equivalent...

It is shown that a monopolistic firm under uncertainty may be inclined to keep some of its output unsold when demand is low. This gives rise to changes in conventional results. Under uncertainty, a risk-neutral monopolistic firm produces more than in a deterministic environment and it refuses to...

In this paper we study the employment effects of a budget neutral restructuring of taxes levied on employers and employees. We derive conditions for taxes levied on workers to have the same employment effects as taxes levied on firms under standard processes of wage determination. Copyright 2001...

We develop a simple model to illustrate how the effects of turnover costs on wages can be reinforced by an efficiency wage effect. The insider-outsider theory explains why labour turnover costs allow the insiders to earn higher wages than outsiders. According to the efficiency wage theory,...

Recent empirical contributions in labor economics suggest that individual firms face upward sloping labor supplies. We rationalize this by assuming that idiosyncratic non-pecuniary conditions interact with money wages in workers’ decisions to work for specific firms. Likewise, firms supply...