Collective bargaining about corporate social responsibility

[en] If a profit‐maximizing firm credibly commits to an employment‐enhancing corporate social responsibility objective in negotiations with a trade union, the union can reduce its wage demands. Lower wages, ceteris paribus, raise profits, while the increase in employment enhances the payoff of a wage‐setting trade union. Therefore, both the firm and the trade union can be better off in the presence of a collectively bargained corporate social responsibility objective than in its absence. Accordingly, establishing a corporate social responsibility objective can give rise to a Pareto improvement and mitigate the inefficiency resulting from collective wage negotiations.

Disciplines :

Microeconomics

Author, co-author :

Goerke, Laszlo ; Trier University IAAEU, IZA, CESifo, GLO

PAULUS, Nora ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF)

External co-authors :

yes

Language :

English

Title :

Collective bargaining about corporate social responsibility

Publication date :

17 October 2024

Journal title :

Canadian Journal of Economics

ISSN :

0008-4085

eISSN :

1540-5982

Publisher :

Wiley

Peer reviewed :

Peer reviewed

Additional URL :

https://onlinelibrary.wiley.com/doi/pdf/10.1111/caje.12736

Available on ORBilu :

since 18 October 2024

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