Wage bargaining and welfare benefits in the time of Covid-19. Bipartite sectoral funds and labor market equilibrium

We provide a theoretical model of the employment effects of a tax-benefit policy implemented by Bipartite Sectoral Funds (BSFs), ruled by workers’ unions and employers’ organizations, based on a wage bargaining that includes the basic elements of a tax-benefit policy and allows for the equivalence of contributions and benefits. We show that employers and workers share the provision costs of the benefits and the institutional profile of the BSFs affects the degree of the equivalence of contributions and benefits. This may actually occur if 1) the exchange between wage and benefits is feasible in the context of current industrial relations; 2) the workers attach a sufficiently high value to the benefits; 3) BSFs are autonomous from Government interference.