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This study examines how the size of trade unions relative to the labor force impacts on the desirability of different organizational forms of self- financing unemployment insurance (UI) for workers, firms, and with reference to an efficiency criterion. For this purpose, we respectively numerically compare the outcome of a model with a uniform payroll tax to a model where workers pay taxes according to their systematic risk of unemployment. Our results highlight the importance of the bargaining structure for the assessment of a particular UI scheme. Most importantly, it depends on the size of the unions whether effciency favors a uniform or a differentiated UI scheme.
Existing theoretical literature fails to explain the differences between the pay of workers that are covered by union agreements and others who are not. This study aims at closing this gap by a single general- equilibrium approach that integrates a dual labor market and a two- sector product market. Our results suggest that the so called 'union wage gap' is largely determined by the degree of centralization of the bargains, and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.
(De)regulatory interventions frequently have unintended cross- market effects, which may or may not be desirable. We assess the effects of three policies on aggregate variables, in particular real income, from a theoretical perspective. Our results suggest that instruments acting upon wages have only a weak impact on real income, whereas the distribution of income is affected strongly. In contrast, a policy that enhances product market competition is fostering real income, but also impacts strongly on union wages and the distribution of income.