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Unionization, market structure, and economic growth

Author

Listed:
  • Lei Ji

    () (SciencesPo OFCE and SKEMA Business School, Sophia Antipolis, France)

  • Juin-Jen Chang

    () (Institute of Economics, Academia Sinica, Academia Sinica, Taipei 115, Taiwan)

  • Chien-Yu Huang

    () (Southwestern University of Finance and Economics, Chengdu, China)

Abstract

This article investigates the macroeconomic effects of unionization in a Schumpeterian growth model with an endogenous product market structure and a unionized labor market. The endogeneity of the market structure and the trade unionism of the labor market interact and jointly determine the equilibrium unemployment, firm size, number of firms, economic growth, and distribution of income between workers and firms. We show that unionization governs the distribution of income between workers and firms and the unemployment rate, but it does not give rise to any growth effect on the economy. In addition, unionization discourages potential entrants and hence decreases the equilibrium number of firms. These results echo the empirical observation in the sense that unionization raises unemployment and alters the distribution of income between workers and firms, but it does not give rise to a significant, real impact on the firms’ investment and the economy-wide growth.

Suggested Citation

  • Lei Ji & Juin-Jen Chang & Chien-Yu Huang, 2016. "Unionization, market structure, and economic growth," Southern Economic Journal, Southern Economic Association, vol. 82(3), pages 935-951, January.
    • Handle: RePEc:sej:ancoec:v:82:3:y:2016:p:935-951
    DOI: 10.1002/soej.12111
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    File URL: http://dx.doi.org/10.1002/soej.12111
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    Citations

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    Cited by:

    1. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi, 2016. "Unions, innovation and cross-country wage inequality," Journal of Economic Dynamics and Control, Elsevier, vol. 64(C), pages 104-118.
    2. Chu, Angus C. & Kou, Zonglai & Wang, Xilin, 2020. "Dynamic effects of minimum wage on growth and innovation in a Schumpeterian economy," Economics Letters, Elsevier, vol. 188(C).
    3. Chu, Angus C. & Kou, Zonglai & Liu, Xueyue, 2018. "Labor union and the wealth-income ratio," Economics Letters, Elsevier, vol. 167(C), pages 29-35.
    4. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi & Liao, Chih-Hsing, 2019. "Effects of Minimum Wage on Automation and Innovation in a Schumpeterian Economy," MPRA Paper 95824, University Library of Munich, Germany.
    5. Grieben, Wolf-Heimo & Şener, Fuat, 2017. "Wage bargaining, trade and growth," Research in Economics, Elsevier, vol. 71(3), pages 564-587.
    6. Chu, Angus C. & Furukawa, Yuichi & Kou, Zonglai & Liu, Xueyue, 2019. "Effects of Minimum Wage on Import and Innovation: Theory and Evidence from China," MPRA Paper 97008, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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