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Integration, Labor Market Regulation, Lobbying, and Technological Change

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  • Palokangas, Tapio K.

    () (University of Helsinki)

Abstract

This paper examines an economic union where oligopolistic firms produce by skilled and unskilled labor and do in-house R&D by skilled labor. The planner of the union accepts new members to the union, regulates the labor market through a minimum wage for unskilled labor and supports firms by taxation. Firms and workers lobby the planner for prospective policy. It is shown that in the political equilibrium small unions regulate the labor market but do not support firms, while large unions deregulate the labor market and support firms.

Suggested Citation

  • Palokangas, Tapio K., 2009. "Integration, Labor Market Regulation, Lobbying, and Technological Change," IZA Discussion Papers 4096, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4096
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    References listed on IDEAS

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    1. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
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    4. Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-769, August.
    5. Palokangas, Tapio, 1996. "Endogenous growth and collective bargaining," Journal of Economic Dynamics and Control, Elsevier, vol. 20(5), pages 925-944, May.
    6. Palokangas,Tapio, 2010. "Labour Unions, Public Policy and Economic Growth," Cambridge Books, Cambridge University Press, number 9780521144056.
    7. Tapio Palokangas, 2004. "Union-Firm Bargaining, Productivity Improvement and Endogenous Growth," LABOUR, CEIS, vol. 18(2), pages 191-205, June.
    8. Cahuc, Pierre & Michel, Philippe, 1996. "Minimum wage unemployment and growth," European Economic Review, Elsevier, vol. 40(7), pages 1463-1482, August.
    9. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    10. Tapio Palokangas, 2005. "International Labor Union Policy and Growth with Creative Destruction," Review of International Economics, Wiley Blackwell, vol. 13(1), pages 90-105, February.
    11. Meckl, Jurgen, 2004. "Accumulation of technological knowledge, wage differentials, and unemployment," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 65-82, March.
    12. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    13. Hoon, Hian Teck & Phelps, Edmund S., 1997. "Growth, wealth and the natural rate: Is Europe's jobs crisis a growth crisis?," European Economic Review, Elsevier, vol. 41(3-5), pages 549-557, April.
    14. Agell, Jonas & Lommerud, Kjell Erik, 1997. "Minimum wages and the incentives for skill formation," Journal of Public Economics, Elsevier, vol. 64(1), pages 25-40, April.
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    More about this item

    Keywords

    economic integration; minimum wage; market power; endogenous technological change;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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