Title

Uncertainty, Unions and the Theory of Public Sector Labour Markets

Author(s)

Andrew J Oswald Andrew Oswald (University of Oxford and Princeon University)

Paul A Grout Paul Grout (University of Birmingham)

David T Ulph David Ulph (Bristol University)

Abstract

Although public sector unionism is growing throughout the industrialized nations, and there is widespread interest in the question of how such labor markets operate, little theoretical work has been done on these problems. The paper develops a two sector general equilibrium model in which a government and a public sector union together negotiate an efficient contract. Public sector wages turn out to be sticky compared to those in the private sector, and there is over-employment in the publicly run half of the economy. The model's features are rather different from those in the private contract literature. Extensions of the model to include union-run insurance, endogenous membership, missing capital markets and public goods are also considered.

Creation Date

1984-07

Section URL ID

IRS

Paper Number

176

URL

https://dataspace.princeton.edu/bitstream/88435/dsp01zw12z529m/1/176.pdf

File Function

Jel

C65

Keyword(s)

unions, public sector

Suppress

false

Series

1