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Economics Research International
Volume 2013 (2013), Article ID 653731, 6 pages
Research Article

Insider Power and Average Labor Demand When Recessions Are Prolonged

Departamento de Fundamentos del Análisis Económico, Facultad de Ciencias Económicas y Empresariales, Universidad de Santiago de Compostela, Avenida do Burgo S/N, A Coruña 15784 Santiago de Compostela, Spain

Received 25 September 2013; Accepted 11 October 2013

Academic Editor: Colin C. Williams

Copyright © 2013 Pilar Díaz-Vázquez. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


This paper examines how insider power in wage negotiations affects average labor demand when recessions are more persistent than booms. It shows that the effect of insider power on average labor demand is more contractionary the greater is the persistence of troughs relative to booms. This analysis is a contribution to the discussion of why the existence of dual labor markets (in which insider power is strong) is negative for employment in the current situation of more prolonged troughs.