Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining

C.-J. Haake, T. Upmann, P. Duman, Scandinavian Journal of Economics 125 (2022) 403–440.

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Journal Article | Published | English
Abstract
We analyse the two-dimensional Nash bargaining solution (NBS) by deploying the standard labour market negotiations model of McDonald and Solow (1981). We show that the two-dimensional bargaining problem can be decomposed into two one-dimensional problems, such that the two solutions together replicate the solution of the two-dimensional problem if the NBS is applied. The axiom of Independence of Irrelevant Alternatives is shown to be crucial for this type of decomposability. This result has significant implications for actual negotiations because it allows for the decomposition of a multi-dimensional bargaining problem into one-dimensional problems---and thus helps to facilitate real-world negotiations.
Publishing Year
Journal Title
Scandinavian Journal of Economics
Volume
125
Issue
2
Page
403-440
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Financial disclosure
Article Processing Charge funded by the Deutsche Forschungsgemeinschaft.
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Haake C-J, Upmann T, Duman P. Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining. Scandinavian Journal of Economics. 2022;125(2):403-440. doi:https://doi.org/10.1111/sjoe.12518
Haake, C.-J., Upmann, T., & Duman, P. (2022). Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining. Scandinavian Journal of Economics, 125(2), 403–440. https://doi.org/10.1111/sjoe.12518
@article{Haake_Upmann_Duman_2022, title={Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining}, volume={125}, DOI={https://doi.org/10.1111/sjoe.12518}, number={2}, journal={Scandinavian Journal of Economics}, publisher={Wiley}, author={Haake, Claus-Jochen and Upmann, Thorsten and Duman, Papatya}, year={2022}, pages={403–440} }
Haake, Claus-Jochen, Thorsten Upmann, and Papatya Duman. “Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining.” Scandinavian Journal of Economics 125, no. 2 (2022): 403–40. https://doi.org/10.1111/sjoe.12518.
C.-J. Haake, T. Upmann, and P. Duman, “Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining,” Scandinavian Journal of Economics, vol. 125, no. 2, pp. 403–440, 2022, doi: https://doi.org/10.1111/sjoe.12518.
Haake, Claus-Jochen, et al. “Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining.” Scandinavian Journal of Economics, vol. 125, no. 2, Wiley, 2022, pp. 403–40, doi:https://doi.org/10.1111/sjoe.12518.

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