Short-Run Bargaining, Factors Shares and Growth
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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- Andreas Irmen & Berthold U. Wigger, 2000.
"Trade Union Objectives and Economic Growth,"
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141, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
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- Bucci, Alberto & Fiorillo, Fabio & Staffolani, Stefano, 2001. "Can Market Power influence Employment, Wage Inequality and Growth ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000030, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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- 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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