Labour Market and distributive lop

ABSTRACT

This paper examines the effects of the segmentation of the labour and goods markets over the dispersion of relative prices and wages in the Brazilian economy. The theoretical argument is based in the behaviour of firms in the oligopolist and competitive sectors of the economy, on one hand, and the behaviour of organized and non-organized labour, on the other. We suggest that the negotiations between oligopolist firms and organized labour can be seen as a positive-sum game; whereas a zero-sum game characterizes the distribution of income in the economy as a whole. Hence, we conclude that there has been a redistribution of income in favour of profits and wages of those agents operating in the oligopolist sectors in detriment of the other agents in the economy.

KEYWORDS:
Inflation; wages; unions