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Employment, Innovation and Union Bargaining Models: New Tests and Evidence from UK Manufacturing Firms


  • Van Reenen, John


This paper investigates the impact of innovation on employment using a panel of UK manufacturing firms and a headcount measure of innovations. It focuses on unionized firms and outlines a methodology for testing between various types of union bargaining models. It also argues that the innovation effect can be used to distinguish between shirking models and union bargains. Innovation is found to have positive effect on company employment raising it by 9--12% in the short run and up to 40% in the long run. Furthermore, although the data cannot reject a labour demand model, firms with stronger unions have higher employment growth from new products and processes.

Suggested Citation

  • Van Reenen, John, 1994. "Employment, Innovation and Union Bargaining Models: New Tests and Evidence from UK Manufacturing Firms," CEPR Discussion Papers 874, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:874

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    References listed on IDEAS

    1. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
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    3. Abraham, Katharine G & Katz, Lawrence F, 1986. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 507-522, June.
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    5. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    6. Barry Eichengreen., 1990. "One Money for Europe? Lessons from the US Currency Union," Economics Working Papers 90-132, University of California at Berkeley.
    7. Geweke, John & Marshall, Robert C & Zarkin, Gary A, 1986. "Mobility Indices in Continuous Time Markov Chains," Econometrica, Econometric Society, vol. 54(6), pages 1407-1423, November.
    8. Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
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    10. Christiano, Lawrence J & Eichenbaum, Martin, 1992. "Liquidity Effects and the Monetary Transmission Mechanism," American Economic Review, American Economic Association, vol. 82(2), pages 346-353, May.
    11. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
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    Cited by:

    1. Alyan, Nafez, 1999. "Technology and the US labor market: Evidence from the sectoral and regional decomposition of the change in the US workforce skill mix," Economics Letters, Elsevier, vol. 63(1), pages 111-118, April.
    2. Pfeiffer, Friedhelm & Brade, Joachim, 1995. "Weiterbildung, Arbeitszeit und Lohneinkommen," ZEW Discussion Papers 95-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item


    Employment; Innovation; Panel Data; Union Bargaining;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • 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


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