John T. Addison
This paper charts changing views on a labor market institution from the perspective of microeconomic and macroeconomic flexibility. The particular labor market institution examined here is collective bargaining – other labor market institutions will be mentioned only in passing. And in discussing microeconomic flexibility and reallocation needs we will be rather more concerned with enterprise flexibility than with considerations of external adjustment. Our discussion of macroeconomic flexibility centers familiarly on the ability of the economy to maintain a low average unemployment rate and to limit fluctuations in the unemployment rate in response to shocks under different collective bargaining regimes.