Subsidising Education with Unionised Labour Markets
AbstractIt is well known from the literature that a unionisation of labour markets leads to an increase in wages and a decrease in employment. However, in these models human capital formation is usually taken as given. This paper internalises the education decision and shows that a unionisation of the labour market for unskilled workers will also lead to an inefficiently low education level. We discuss the effects of an education subsidy. It will turn out that both the way of financing and the reaction of the trade union to tax rate changes are crucial for the employment and welfare effects.
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Bibliographic InfoPaper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 7.
Date of creation: Mar 2002
Date of revision:
Human Capital ; Unemployment ; Subsidisation;
Find related papers by JEL classification:
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
This paper has been announced in the following NEP Reports:
- NEP-LAB-2003-07-10 (Labour Economics)
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