DP288 The Factorial Distribution of Income in the Union Bargaining Model

Author(s): Michael Beenstock

Publication Date: March 1989

Keyword(s): Bargaining , Unions , Wage Share

JEL(s): 824 , 831 , 832

Programme Areas: Applied Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP288.asp

Attention is focused on the implications of the Union Bargaining Model (UBM) for the factorial distribution of income. It is shown that when the contract curve is given, greater union bargaining power raises the wage share. We argue, however, that the factors that strengthen the bargaining power of unions are likely to induce offsetting shifts in the contract curve. A simulation exercise indicates that the shift in the contract curve is likely to be of secondary importance in determining the wage share.