"This paper examines the explicit loss born by workers who face constraints in their working hours by analyzing differences in actual and desired hours and wages. Men tend to be underemployed while women are evenly split between over- and underemployment. Losses in surplus are generally small, but 10% of underemployed men and women experience losses of more than 34% or 50% of surplus, respectively. The loss measure is also an important determinant in predicting labor market transitions, meaning increases in surplus losses generate a higher probability of changing from workers' present jobs or changing the number of hours. "("JEL "J22, J41) Copyright (c) 2008 Western Economic Association International.
Although unemployment is often used as a measure of labor market inefficiency, economic theory indicates that market inefficiency is determined by both the gap between and the elasticities of supply and demand. Using time series data for the United States and United Kingdom, this article investigates how good the unemployment rate is as a measure of labor market inefficiency by calculating the deadweight loss associated with unemployment rates over time. Results show that the loss arising from unemployment is low across time and countries and that the unemployment rate is often a weak proxy for comparing labor market inefficiency. (JEL J6)
This paper looks upon the effects of delegation of the bargaining process within unions. It investigates the allocation of capital when investment is sunk and there is an absence of binding contracts. Although capital investment is inefficient, capital allocation can be improved by precommitment. Strong union members precommit by hiring a weak leader, whilst weak union members hire a strong union leader. Governments can increase the efficiency of capital by reducing the intrinsic union strength, but could reduce the efficiency of capital if intrinsic internal union leader strength is reduced.
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