Are labor unions important for business cycle fluctuations? Lessons from Bulgaria

Vasilev, Aleksandar (2020) Are labor unions important for business cycle fluctuations? Lessons from Bulgaria. Eurasian Economic Review, 10 (1). pp. 143-161. ISSN 1309-422X

Full content URL: https://doi.org/10.1007/s40822-019-00139-9

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Are labor unions important for business cycle fluctuations? Lessons from Bulgaria
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Abstract

In this paper, we investigate the quantitative importance of collective bargaining
agreements for the observed fluctuations in Bulgarian labor markets. Following
Maffezzoli (Rev Econ Dyn 4:860–892, 2001), we introduce a monopoly union into
a real-business-cycle model with government sector. We calibrate the model to Bulgarian
data for the period following the introduction of the currency board arrangement
(1999–2018), and compare and contrast it to a model without unions. We find
that the sequential bargaining procedure between the monopoly union and the standing
firm produces an important internal propagation mechanism within the theoretical
setup, which allows the monopoly model to fit data better than the alternative framework
with perfectly-competitive labor markets.

Keywords:Business cycles, General equilibrium, Labor unions, Indivisible labor, Involuntary unemployment
Subjects:L Social studies > L130 Macroeconomics
Divisions:Lincoln International Business School
ID Code:40984
Deposited On:22 Jun 2020 11:15

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