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Technology resistance and globalisation with trade unions: the choice between employment protection and flexicurity

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Author Info
Kjell Erik Lommerud () (University of Bergen)
Odd Rune Straume () (Universidade do Minho - NIPE)

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Abstract

We analyse how different labour market institutions — employment protection versus ‘flexicurity’ — affect technology adoption in unionised firms. The analysis is cast in a setting of corporate globalisation, where domestic unionised labour face the double threat of labour-saving technological innovations and international outsourcing of domestic production. In the main part of the analysis, we analyse trade unions’ incentives to oppose or endorse the adoption of new technology. Our main result is that both weaker employment protection and a higher reservation wage for unionsed workers (interpreted as increased ‘flexicurity’) contribute to making trade unions more willing to accept labour-saving technological change. Furthermore, these effects are reinforced by globalisation. In an extension to the main analysis, we endogenise the technological progress by studying firms’ incentives to invest in new technology and find that these incentives are also generally strengthened in a labour market with more ‘flexicurity’.

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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 25/2007.

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Date of creation: 2007
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Handle: RePEc:nip:nipewp:25/2007

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Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
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Related research
Keywords: Technology adoption; Globalisation; Trade unions; Employment protection; Flexicurity;

Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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