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Employment Protection versus Flexicurity: On Technology Adoption in Unionised Firms

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  • Kjell Erik Lommerud
  • Odd Rune Straume

Abstract

We analyse how different labour market institutions - employment protection versus flexicurity - affect technology adoption in unionised firms. We consider both trade unions’ incentives to oppose or endorse labour-saving technology, and firms’ incentives to invest in such technology. We find that increased flexicurity – interpreted as less employment protection and a higher reservation wage for workers - unambiguously increase firms’ incentives for technology adoption, even when taking into account the response in unionised wage setting to such new technology. If we assume that unions have some direct influence over the technology to be adopted, a higher reservation wage also makes unions more willing to accept technological change. Less employment protection has the opposite effect, since this increases the downside (job losses) of labour-saving technology.

Suggested Citation

  • Kjell Erik Lommerud & Odd Rune Straume, 2008. "Employment Protection versus Flexicurity: On Technology Adoption in Unionised Firms," CESifo Working Paper Series 2472, CESifo.
    • Handle: RePEc:ces:ceswps:_2472
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    4. Torben M. Andersen, 2016. "Incentives versus insurance in the design of tax-financed unemployment insurance," International Journal of Economic Theory, The International Society for Economic Theory, vol. 12(2), pages 127-150, June.
    5. Meccheri Nicola, 2023. "On the Social Desirability of Centralized Wage Setting when Firms are Run by Biased Managers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 23(3), pages 701-725, July.
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    7. Andersen, Torben M, 2010. "Incentive and Insurance Effects of Tax Financed Unemployment Insurance," CEPR Discussion Papers 8025, C.E.P.R. Discussion Papers.
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    12. Meccheri, Nicola, 2023. "Unionised dockworkers and port ownership structure in an international oligopoly," GLO Discussion Paper Series 1326, Global Labor Organization (GLO).
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    More about this item

    Keywords

    technology adoption; trade unions; employment protection; flexicurity;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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