Naylor, Robin A. --- "Labour Supply, Efficient Bargains and Countervailing Power" [2003] ELECD 85; in Waterson, Michael (ed), "Competition, Monopoly and Corporate Governance" (Edward Elgar Publishing, 2003)

Book Title: Competition, Monopoly and Corporate Governance

Editor(s): Waterson, Michael

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843760894

Section: Chapter 6

Section Title: Labour Supply, Efficient Bargains and Countervailing Power

Author(s): Naylor, Robin A.

Number of pages: 16

Extract:

6. Labour supply, efficient bargains
and countervailing power
Robin A. Naylor

One of the many and profound lessons one learns even in casual conversa-
tion with Keith Cowling is the importance of challenging basic assump-
tions. This is at once liberating ­ as when the challenge is of the mainstream
or orthodox ­ and intimidating ­ as when the questioning required is of
oneself and one's own assumptions. In each case, engagement with Keith is
stimulating, rewarding and always designed to be constructive. Keith's
views on industrial and labour economics have influenced my own work in
many respects. For example, Keith's view that oligopoly rather than perfect
competition is the appropriate starting point for analysis is echoed in my
focus on models of union-bargaining in contexts of oligopolistic product
markets. From this, it is also natural to challenge the conventional wisdom
that firms do not possess market power in their labour market.
In this chapter the concept of employer power in the labour market ­ vir-
tually a heresy in the orthodoxy of mainstream competitive models ­ is a
key feature of the labour supply model which we develop. Power is assumed
to characterise firms in the labour market, enabling them to extract rent
from workers. This leads to a non-orthodox view of labour supply and to
corresponding implications for the desirability of labour market interven-
tions such as minimum wage legislation. However, one implication of the
model is that employers can respond to minimum wages by adjusting work
hours ...