Abstract
This paper examines the implications of a rise in the bargaining power of workers on the real wage, income distribution, and the levels of employment and output using a macroeconomic model with monopolistic competition and worker-owner Nash bargaining at the firm level. It thereby provides optimizing microfoundations to Kalecki's macroeconomic analysis of the positive effect on output of a rise in trade-union power, and contrasts it with the neoclassical view based on the diminishing marginal productivity of labor.
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Dutt, A.K., Sen, A. Union bargaining power, employment, and output in a model of monopolistic competition with wage bargaining. Zeitschr. f. Nationalökonomie 65, 1–17 (1997). https://doi.org/10.1007/BF01239056
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DOI: https://doi.org/10.1007/BF01239056