Unionisation, Growth and Endogenous Skill-Formation
AbstractIn This paper we integrate union wage bargaining into a model in which agents endogenously choose wether they want to invest in education or not. With this we take up a serious drawback in the existing literature on growth an unionisation, namely the assumption that the level of high-skilled labour is exogenously given. The impact of unionisation is that on the one hand high-skilled supply decreases, because with a higher low-skilled wage, the incentive to invest in education decreases. On the other hand high-skilled demand decreases, since investing in R&D decreases with lower production and, hence with less low-skilled employment. The interesting point is that due to a capitalisation effect, the high-skilled supply curve is U-shaped. With this the economy is characterised by multiple equilibria and the net effect of union wage bargaining depends on the equilibrium the economy starts from. The rate of growth could decrease as well as it could increase.
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Bibliographic InfoPaper provided by University of Kassel, Institute of Economics in its series Discussion Papers in Economics with number 45/03.
Length: 23 pages
Date of creation: Feb 2003
Date of revision:
Labour Unions; Unemployment; Growth; Skill Formation;
Find related papers by JEL classification:
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
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