Profit-Sharing, Collective Bargaining and Employment
Abstract
It is well known in trade union theory that efficient wage-employment bargains are not enforceable when firms set employment levels unilaterally. Therefore, analysis is often confined to enforceable but inefficient wage contracts. It is shown in this paper that both enforceability and efficiency can be obtained if the union and the firm bargain about a linear share contract instead of a pure wage rate. The share contract specifies remuneration per employee as the sum of a basic wage and a share in net profits per worker.
- ISSN: 0357-9603
- ISBN: 951-9281-65-7
