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Unionisation Structures and Innovation Incentives

  • Haucap, Justus

    ()

    (Helmut Schmidt University, Hamburg)

  • Wey, Christian

    ()

    (Wissenschaftszentrum Berlin fuer Sozialforschung (WZB))

This paper examines how different unionisation structures affect firms' innovation incentives and industry employment. We distinguish three modes of unionisation with increasing degree of centralisation: (1) "Decentralisation" where wages are determined independently at the firm-level, (2) "coordination" where one industry union sets individual wages for all firms, and (3) "centralisation" where an industry union sets a uniform wage rate for all firms. While firms' investment incentives are largest under "centralisation", investment incentives are non-monotone in the degree of centralisation: "Decentralisation" carries higher investment incentives than "coordination". Labour market policy can spur innovation by decentralising unionisation structures or through non-discrimination rules.

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Paper provided by Helmut Schmidt University, Hamburg in its series Working Paper with number 21/2003.

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Length: 30 pages
Date of creation: Sep 2003
Date of revision:
Handle: RePEc:ris:vhsuwp:2003_021
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