Wage Bargaining and Induced Technical Change in a Linear Economy: Model and Application to the US (1963-2003)
AbstractIn a simple one-sector, two-class, fixed-proportions economy, wages are set through axiomatic bargaining a la Nash . As for choice of technology, firms choose the direction of factor augmentations to maximize the rate of unit cost reduction (Kennedy , and more recently Funk ). The aggregate environment resulting by self-interested decisions made by economic agents is described by a two-dimensional dynamical system in the employment rate and output/capital ratio. The economy converges cyclically to a long-run equilibrium involving a Harrod-neutral prole of technical change, a constant rate of employment of labor, and constant input shares. The type of oscillations predicted by the model matches the available data on the United States (1963-2003). Finally, institutional change, as captured by variations in workers' bargaining power, has a positive effect on the rate of output growth but a negative effect on employment.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14635.
Date of creation: 02 Apr 2009
Date of revision:
Bargaining; Induced Technical Change; Factor Shares; Employment;
Other versions of this item:
- Tavani, Daniele, 2012. "Wage bargaining and induced technical change in a linear economy: Model and application to the US (1963–2003)," Structural Change and Economic Dynamics, Elsevier, vol. 23(2), pages 117-126.
- Daniele Tavani, 2009. "Wage Bargaining and Induced Technical Change in a Linear Economy: Model and Application to the US (1963-2003)," EERI Research Paper Series EERI_RP_2009_15, Economics and Econometrics Research Institute (EERI), Brussels.
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-18 (All new papers)
- NEP-BEC-2009-04-18 (Business Economics)
- NEP-LAB-2009-04-18 (Labour Economics)
- NEP-MAC-2009-04-18 (Macroeconomics)
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