Labour Market Regulation, Productivity-Improving R&D and Endogenous Growth
AbstractWe present a growth model in which R&D increases productivity, union-firm bargaining determines the distribution of rents and the government can support unions by labour market regulation. We show that if unions are initially very strong, regulation increases only the workers’ profit share and has no impact on employment and growth. Otherwise, regulation increases wages. Because firms try to escape this cost increase through the improvement of productivity by R&D, the economy grows faster. Regulation (deregulation) is desirable when the growth rate is below (above) some critical level.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 720.
Length: 21 pages
Date of creation: Feb 2003
Date of revision:
Publication status: published as "Union-Firm Bargaining, Productivity Improvement and Endogenous Growth" in: Labour, 2004, 18 (2), 191-205
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Find related papers by JEL classification:
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-02-24 (All new papers)
- NEP-DEV-2003-02-24 (Development)
- NEP-LAB-2003-02-24 (Labour Economics)
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