Exchange Rates and Wages in Unionised Labour Markets

Immigration and Skill Formation in Unionised Labour Markets

This paper analyses the impact of immigration on the welfare of the native population in an economy that consists of skilled and unskilled workers. Due to unionisation, the wage rate in the market for unskilled labour is above the competitive level. For a given skill endowment of the native population, we show that immigration reduces the welfare of the host country up to a certain threshold an...

Minimum Wages in a Unionised Economy

This paper aims at contributing to the employment e ects of minimum wages in a unionised economy. In a dual labour market model, the rst sector outcome is characterised by bargaining between unions and rms, while in the second sector rms have to pay a statutory minimum wage. The model shows that a minimum wage increase has negative employment effects only if the bargaining outcome is described ...

Wages, Flexible Exchange Rates, and Macroeconomic Policy*

In an open economy with a floaLing exchange rate, the efficacy of fiscal and monetary policy depends fundamentally on the wage-setting pnxiess. In the canonical models of Mundell and Fleming, monetary expansion raises output via an exchange rate depreciation, while fiscal expansion has no output effect. These results hold only when real wages can be altered by exchange rate movements; if the re...

Labour Markets and Wages Policies during Economic Transition

Optimal Capital Taxation in Economies with Unionised and Competitive Labour Markets

According to the existing literature, capital taxes should not be imposed in the presence of optimal profit taxation in either unionised or competitive labour markets. We show that this conclusion does not hold for an economy with dual labour markets, where the competitive wage rate provides the outside option for unionised workers. Even with non-distortionary profit taxation it is optimal for ...