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Unions and Firms' Investments. A Unified View

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  • Fabio Berton
  • Stefano Dughera
  • Andrea Ricci

Abstract

In this paper, we present a simple model in which a unionized and non-unionized firm optimally make investment decisions given their labor productivity. By allowing workers’ organizations to have positive effects on labor effort, we find that the classic hold-up problem does not necessarily survive. We also derive conditions under which rent-seeking by unions may actually encourage firms’ investments.

Suggested Citation

  • Fabio Berton & Stefano Dughera & Andrea Ricci, 2019. "Unions and Firms' Investments. A Unified View," LABORatorio R. Revelli Working Papers Series 168, LABORatorio R. Revelli, Centre for Employment Studies.
    • Handle: RePEc:cca:wplabo:168
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor Unions; Rent seeking; Workers’ effort; Firms’ investments; Hold-up;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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