Trade unions, employee share ownership and wage setting: A supply-side approach to the share economy
AbstractEmployee share ownership is growing increasingly important. This paper studies employee share ownership in an economy with one monopoly union for each firm. We modify an implicit contra t model by adding dividend income to the usual wage income. Union members differ in exogenous stock endowments and choose wages under majority rule. As a result, wages are decreasing in stock endowments and a skewed distribution of stoc k-capital leads to higher wages and lower employment. Switching to a more equal distribution can increase employment and production. An optimal portfolio rule suggests that macroeconomic gains can be made from limiting the diversification of portfolios. Last, we show how the transfer of shares to employees can be made economically feasible.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 65.
Length: 35 pages
Date of creation: Aug 1995
Date of revision:
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More information through EDIRC
Trade unions; profit sharing; distribuion; voting; portfolio choice;
Find related papers by JEL classification:
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
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