Lobbying by capital and labor over trade and labor market policies
AbstractThis paper uses the common agency approach to analyze the joint determination of product and labor market distortions in a small open economy. Capital owners and union members lobby the government on both tariffs and minimum wages, while other factors of production are not organized. The paper shows that product and labor market distortions always move in the same direction, and that their level is not modified by social pacts between capital and labor. It also shows that labor market distortions are second best. Hence, conditionality by foreign organizations should target distortions in product markets but not in labor markets.
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Bibliographic InfoArticle provided by Elsevier in its journal European Economic Review.
Volume (Year): 42 (1998)
Issue (Month): 7 (July)
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Web page: http://www.elsevier.com/locate/eer
Other versions of this item:
- Martín Rama & Guido Tabellini, . "Lobbying by Capital and Labor over Trade and Labor Market Policies," Working Papers 94, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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