Trade unions, non-binding wage agreements, and capital accumulation
This paper provides a counterexample to some recent results of Grout (1984) which state that in a bargaining situation without binding wage agreements, the capital stock will be biased downwards. In a general equilibrium setting, this result may be reversed. The argument is built around a simple Diamond-type overlapping generations model where the young work and old own both capital and shares in firms. A move from binding to non-binding wage contracts may increase the capital stock in this environment. A rise in trade-union power will generally increase the capital stock and reduce the speed of the economy's adjustment.
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Volume (Year): 35 (1991)
Issue (Month): 7 (October)
Pages: 1411-1426
| Handle: | RePEc:eee:eecrev:v:35:y:1991:i:7:p:1411-1426 |
| Contact details of provider: | Web page: http://www.elsevier.com/locate/eer
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