Wage Bargaining and Wage Interdependence

This paper investigates wage interdependence among labor unions in the decentralized bargaining economy, and attempts to show that this depends on the assumed labor union model. Although the efficient bargain model and the monopoly union model are able to describe union behavior, only the monopoly union model has been used in the literature on wage interdependence. It has been shown in the literature that wage increases in one union induce wage increases in another. This paper shows that, by using the efficient bargain model, wage increases in one union do not necessarily induce increases in another, thereby proving that wage interdependence depends on the labor union model used