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A Note on Trade Unions, Unemployment Insurance, and Endogenous Growth

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  • Luciano Fanti

    () (Department of Economics, University of Pisa, Via Cosimo Ridolfi 10, I–56124 Pisa (PI), Italy.)

  • Luca Gori

    () (Department of Economics, University of Pisa, Via Cosimo Ridolfi 10, I–56124 Pisa (PI), Italy.)

Abstract

One of the most important economic problems in Europe today is the apparently permanent high rate of unemployment associated with unionized labor markets. The effects of unionization on economic growth are recognized by the most part of the growth theoretical literature framed in the standard overlapping generations model to be either negative or at most neutral, with some exceptions. Developing a model in line with this strand of literature, we show a rather unusual result: the unionization of the labor market in the conventional double Cobb–Douglas economy may always promote economic growth when unemployment benefits are financed by a consumption tax rather than a wage tax, and the union's preference weight on raising wages is sufficiently low.

Suggested Citation

  • Luciano Fanti & Luca Gori, 2011. "A Note on Trade Unions, Unemployment Insurance, and Endogenous Growth," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(2), pages 270-280.
  • Handle: RePEc:pal:easeco:v:37:y:2011:i:2:p:270-280
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    Citations

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    Cited by:

    1. Fanti, Luciano & Gori, Luca, 2013. "Efficient bargaining versus right to manage: A stability analysis in a Cournot duopoly with trade unions," Economic Modelling, Elsevier, vol. 30(C), pages 205-211.
    2. Fanti, Luciano & Gori, Luca, 2011. "Stability in a Cournot duopoly under asymmetric unionism," MPRA Paper 33694, University Library of Munich, Germany.
    3. Luciano Fanti, 2014. "Welfare effects of cross-ownership in a unionised duopoly," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2014(2), pages 21-41.
    4. Luciano Fanti & Nicola Meccheri, 2013. "Managerial Delegation under Alternative Unionization Structures," LABOUR, CEIS, vol. 27(1), pages 38-57, March.
    5. Luciano Fanti, 2011. "When do firms prefer either monopolistic unions or an efficient bargaining?," Discussion Papers 2011/130, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    6. Luciano Fanti, 2011. "When an efficient bargaining is more “efficient†than a competitive labour market," Discussion Papers 2011/131, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    7. Fanti, Luciano & Gori, Luca, 2011. "Efficient bargaining versus right to manage: a stability analysis with heterogeneous players in a duopoly with quantity competition and trade unions," MPRA Paper 34434, University Library of Munich, Germany.
    8. Luciano Fanti & Nicola Meccheri, 2012. "Labour decreasing returns, industry-wide union and Cournot-Bertrand profit ranking. A note," Economics Bulletin, AccessEcon, vol. 32(1), pages 894-904.

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