Individual versus collective bargaining under relative income concerns

Year: 2023

Type: Journal Publication

Journal: Economics Letters

Abstract

We compare individual and collective bargaining when workers have relative income concerns and employment relationships are characterized by moral hazard. We show that collective bargaining internalizes externality effects that arise from other-regarding preferences. This improves firms’ abilities to create effort incentives and can therefore reduce inefficiencies associated with asymmetric information. We show that if relative income concerns are not too strong, both firms and workers strictly prefer collective bargaining.

Publication Information

TRR 266 researchers

Harvey Upton Humboldt University of Berlin

External researchers

Dominique Demougin

Start Page

End Page

Volume Number

233

DOI

DOI Link

Cite this article as

Demougin, D., & Upton, H. (2023). Individual versus collective bargaining under relative income concerns. Economics Letters, 233,1-4. https://doi.org/10.1016/j.econlet.2023.111380

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, Goethe University Frankfurt, University of Cologne and Leibniz University Hannover who share the same research agenda.