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Unionization Structures and Innovation Incentives

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Author Info
Haucap, Justus
Wey, Christian

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Abstract

This Paper examines how different unionization structures affect firms' innovation incentives and industry employment. We distinguish three modes of unionization with increasing degree of centralization: (1) ‘decentralization’ where wages are determined independently at the firm-level, (2) ‘coordination’ where one industry union sets individual wages for all firms, and (3) ‘centralization’ where an industry union sets a uniform wage rate for all firms. While firms' investment incentives are largest under ‘centralization’, investment incentives are non-monotone in the degree of centralization: ‘decentralization’ carries higher investment incentives than ‘coordination’. Labour market policy can spur innovation by decentralizing unionization structures or through non-discrimination rules.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4079.

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Date of creation: Oct 2003
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Handle: RePEc:cpr:ceprdp:4079

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Keywords: centralization hold-up innovation unions

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Beck, Jonathan & Grajek, Michal & Wey, Christian, 2005. "Hypermarket Competition and the Diffusion of Retail Checkout Barcode Scanning," CEPR Discussion Papers 5386, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Vasileios Zikos, 2007. "The Temporal Dimension of Wage Contracts in Oligopoly with Spillovers," Discussion Paper Series 2007_04, Department of Economics, Loughborough University, revised Feb 2007. [Downloadable!]
  4. Kjell Erik Lommerud & Odd Rune Straume, 2007. "Technology resistance and globalisation with trade unions: the choice between employment protection and flexicurity," NIPE Working Papers 25/2007, NIPE - Universidade do Minho. [Downloadable!]
  5. Tomi Kyyrä & Mika Maliranta, 2006. "The Micro-Level Dynamics of Declining Labour Share: Lessons from the Finnish Great Leap," VATT Discussion Papers 406, Government Institute for Economic Research (VATT). [Downloadable!]
  6. Arijit Mukherjee, . "Excessive entry in a bilateral oligopoly," Discussion Papers 08/02, University of Nottingham, School of Economics. [Downloadable!]
  7. Tomi Kyyrä & mika Maliranta, 2006. "The Micro-level Dynamics of Declining Labour Share: Lessons from Finnish Great Leap," Discussion Papers 1049, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Arijit Mukherjee, 2007. "Irrelevance of productivity difference: A case with labor union," Economics Bulletin, Economics Bulletin, vol. 10(17), pages 1-8. [Downloadable!]
  9. Constantine Manasakis & Emmanuel Petrakis, 2007. "Union structure and firms incentives for cooperative R&D investments," Working Papers 0705, University of Crete, Department of Economics. [Downloadable!]
    Other versions:
  10. Gürtzgen, Nicole, 2005. "Rent-sharing : Does the Bargaining Regime Make a Difference? : Theory and Empirical Evidence," ZEW Discussion Papers 05-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  11. Justus Haucap & Uwe Pauly & Christian Wey, 2007. "A Cartel Analysis of the German Labor Institutions and Its Implications for Labor Market Reforms," Ruhr Economic Papers 0009, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
    Other versions:
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