Abstract

In this paper we propose a theoretical model to account for the effect of adversary labour relations on wage distribution. In particular, we study the role of mobilization waves in an environment in which firms protect themselves from uncertainty using dualistic production systems, and we show that they can end up with increasing inequality and lower average wages. We claim that our theoretical framework can be used to complement other explanations of the increase in the residual inequality in US wage distribution that occurred in the 1980s.