Is there any scope for corporatism in macroeconomic policies?

Abstract

This paper studies corporatism as the outcome of bargaining between the government and a representative labor union. We show that if negotiations between these two parties only relate to macroeconomic policies and unions are not assumed to be inflation-averse, corporatism can never be beneficial to both parties. As corporatist policies are nevertheless commonly observed in this context, we discuss possible explanations that reconcile the theory with actual observations. The policy implications of these explanations are also discussed

The Cost of Social Pacts

“…If this is the case, on the one hand, a lower inflation would not be attractive for the union; on the other hand, the union would be damaged by higher employment levels, since they imply lower real wage rates. Thus there could be no incentive for the union to cooperate (Acocella and Di Bartolomeo, ; Acocella et al ., )…”