Efficient Union Contracts in the Presence of Homogeneous Labor and Differentiated Unions

Ana Paula Martins

and

Rui Coimbra

This paper discusses the features of the labor market outcome in the presence of homogeneous labor and multiple unions. It is argued that contract curve agreements, or at least efficient bargaining among unions, may be improved upon by a solution with differential or non-uniform wage payments for workers affiliated to different unions. The equilibrium solution in terms of employment and/or wage bill shares implied for each union with uniform and multiple wage is investigated and confronted for the cases of:
a. efficient bargaining among the unions
b. fully efficient bargaining, 
considering Stone-Geary union utility functions and labor demand is linear.