Wage Determination under Collective Bargaining

Abstract

The analysis of the previous chapter was concerned with the union’s objectives in respect of the wage rate and employment of its membership. In order to analyse wage determination in the presence of trade unions, it is also necessary to consider the employer’s equilibrium levels of wages and employment. Since these will, as we shall see, typically differ from those of the union, it is also necessary to consider the negotiating or collective-bargaining process which takes place between the union and the employer in order to determine the wage that will actually be paid within the limits set by the preferences of these two parties.