Collective Bargaining, Awareness of General Equilibrium Effects, and Unemployment

Download or read book Collective Bargaining, Awareness of General Equilibrium Effects, and Unemployment written by Hans Gersbach and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We explore the significance of general equilibrium feedback effects for wage-bargaining. We examine a two-sector economy and show that if agents only consider labor demand effects low real wages and low unemployment are the consequences. With an intermediate view, i.e., when partial equilibrium effects within a sector are taken into account, high real wages and unemployment result. If all general equilibrium effects are perceived simultaneously, we once again obtain a situation with low wages and unemployment. The results may explain why unemployment is high in some European countries.