# 16-004/V (2016-01-22)

Author(s)
Sabien Dobbelaere, VU University Amsterdam, the Netherlands; Roland Iwan Luttens, VU University Amsterdam, and Amsterdam University College, the Netherlands
Keywords:
collective bargaining, gradual union, firm, search frictions, employment-at-will
JEL codes:
J30, J41, J51

This paper presents an alternative implementation of firm-level collective wage bargaining, where bargaining proceeds as a finite sequence of sessions between a firm and a union of variable size. We investigate the impact of such a `gradual' union on the wage-employment contract in an economy with concave production. In a static framework, the resulting equilibrium is equivalent to the efficient bargaining outcome. In a dynamic framework with search frictions, we demonstrate that gradual collective wage bargaining coincides with all-or-nothing bargaining when bargaining takes place in fictitious time before production.