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The effects of unionization in an R&D growth model with (In)determinate equilibrium

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  • Lai, Chung-Hui
  • Wang, Vey
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    Abstract

    This paper extends an R&D-based growth model of the Rivera-Batiz and Romer-type [Quarterly Journal of Economics 106 (1991) 531] endogenous growth model by embodying a union with elastic labor to investigate the effects of unionization on employment and growth by highlighting the essence of internal conflict within the union. It is shown that an increase in the union’s bargaining power or a union which is more employment-oriented boosts employment and economic growth when the balanced growth equilibrium is determinate. On the other hand, if the union is more wage-oriented, employment and economic growth are enhanced when the balanced growth equilibrium is indeterminate.

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    File URL: http://mpra.ub.uni-muenchen.de/27748/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27748.

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    Date of creation: 07 Nov 2010
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    Handle: RePEc:pra:mprapa:27748

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    Keywords: Union; Collective bargaining; R&D; Indeterminacy; Economic growth;

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, September.
    2. Clark, A., 1989. "Efficient Bargains And The Mcdonald-Solow Conjecture," Papers 350, London School of Economics - Centre for Labour Economics.
    3. Palokangas, Tapio, 1996. "Endogenous growth and collective bargaining," Journal of Economic Dynamics and Control, Elsevier, vol. 20(5), pages 925-944, May.
    4. Jess Benhabib & Roger E.A. Farmer, 1992. "Indeterminacy and Increasing Returns," UCLA Economics Working Papers 646, UCLA Department of Economics.
    5. Ulph, A. M. & Ulph, D. T., 1994. "Labour markets and innovation: Ex-post bargaining," European Economic Review, Elsevier, vol. 38(1), pages 195-210, January.
    6. Jörg Lingens, 2009. "Union Wage Bargaining and the Incentive to Innovate," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(2), pages 260-280, June.
    7. Menezes-Filho, Naercio & Van Reenen, John, 2003. "Unions and Innovation: A Survey of the Theory and Empirical Evidence," CEPR Discussion Papers 3792, C.E.P.R. Discussion Papers.
    8. Faini, Riccardo, 1999. "Trade unions and regional development," European Economic Review, Elsevier, vol. 43(2), pages 457-474, February.
    9. Tetsugen Haruyama & Jun-ichi Itaya, 2006. "Do Distortionary Taxes Always Harm Growth?," Journal of Economics, Springer, vol. 87(2), pages 99-126, 03.
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