After the Second World War in the Netherlands, one of the most open economies in the world, wage moderation has be a leading theme in macroeconomic policy and industrial rela-tions. When wage restraint met with an overheated labour market and strike movements, social partners accepted the...

Revised May 2016. We analyze a labor market with search and matching frictions in which wage setting is controlled by a monopoly union. Frictions render existing matches a form of firm-specific capital that is subject to a hold-up problem in a unionized labor market. We study how this hold-up...

A labor market with search and matching frictions, where wage setting is controlled by a monopoly union that follows a norm of wage solidarity, is found vulnerable to substantial distortions associated with holdup. With full commitment to future wages, the union achieves efficient hiring in the...