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Short-Run Bargaining, Factors Shares and Growth

  • Renato BALDUCCI

    ()

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Stefano STAFFOLANI

    ()

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

In this paper we assume that firms and unions bargain efficiently on wages and employment, whereas work effort is optimally chosen by workers. In the short run, the bargaining process leads to the contract curve. Instead of solving the model and leaving the equilibrium dependent on an exogenous social partners bargaining power, we prefer to leave the wage rate undetermined. Using an endogenous growth model based on human capital, and on the hypothesis that firms invest profits in physical capital while workers optimally allocate their earnings between consumption and investment in human capital, we determine the wage rate that maximizes individual expected utility. Finally, we investigate the relationship between short run behaviour and long run optimality.

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File URL: http://docs.dises.univpm.it/web/quaderni/pdf/188.pdf
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Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 188.

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Length: 19
Date of creation: Jul 2003
Date of revision:
Handle: RePEc:anc:wpaper:188
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  1. Andreas Irmen & Berthold U. Wigger, 2000. "Trade Union Objectives and Economic Growth," CSEF Working Papers 34, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  2. Alberto BUCCI & Fabio FIORILLO & Stefano STAFFOLANI, 2000. "Can Market Power influence Employment, Wage Inequality and Growth?," Working Papers 141, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Palokangas, Tapio K., 2003. "Labour Market Regulation, Productivity-Improving R&D and Endogenous Growth," IZA Discussion Papers 720, Institute for the Study of Labor (IZA).
  4. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  5. Henri L. F. De Groot, 2001. "Unemployment, Growth, and Trade Unions," Growth and Change, Wiley Blackwell, vol. 32(1), pages 69-91.
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