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A “Managerial” Trade Union and Economic Growth

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Abstract

By setting up a simple Romer-type (1989) endogenous growth model embodying a political trade union (rather than the traditional economic labor union), this paper explores the effects of unionization on unemployment, growth and welfare by highlighting the essence of internal conflict within the union. It is shown that the conflicting interests between the leadership and membership within the union play a decisive role in the unemployment, growth and welfare effects of unionization. Given the fact that taxation, besides unions, is another potential candidate in explaining the poor performance of employment and economic growth, we re-examine the taxation effects within the growth model with equilibrium unemployment caused by the presence of the trade union and compare our findings with those for the traditional full-employment growth model. In addition, the dynamic properties of the unionized economy are also examined, with particular emphasis being placed on the role of the trade union in the formation of equilibrium indeterminacy.

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  • Juin-jen Chang & Ming-fu Shaw & Ching-chong Lai, 2005. "A “Managerial” Trade Union and Economic Growth," IEAS Working Paper : academic research 05-A010, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    • Handle: RePEc:sin:wpaper:05-a010
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    3. Ono, Tetsuo, 2019. "Growth, Unemployment, And Fiscal Policy: A Political Economy Analysis," Macroeconomic Dynamics, Cambridge University Press, vol. 23(8), pages 3099-3139, December.
    4. Kokko, Ari & Gustavsson Tingvall, Patrik & Videnord, Josefin, 2017. "Which Antidumping Cases Reach the WTO?," Ratio Working Papers 286, The Ratio Institute.
    5. Fabrizio Mattesini & Lorenza Rossi, 2008. "Productivity Shocks And Optimal Monetary Policy In A Unionized Labor Market Economy," Manchester School, University of Manchester, vol. 76(5), pages 578-611, September.
    6. Chang, Juin-jen & Liu, Chia-ying & Wang, Wei-neng, 2018. "Conspicuous consumption and trade unionism," Journal of Macroeconomics, Elsevier, vol. 57(C), pages 350-366.
    7. Luca Gori & Luciano Fanti, 2009. "Right-to-manage unions endogenous growth and welfare," Economics Bulletin, AccessEcon, vol. 29(2), pages 903-917.
    8. Chang, Juin-jen & Shaw, Ming-fu & Lai, Ching-chong, 2007. "A "Managerial" trade union and economic growth," European Economic Review, Elsevier, vol. 51(2), pages 365-384, February.
    9. Mattesini, Fabrizio & Rossi, Lorenza, 2009. "Optimal monetary policy in economies with dual labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 33(7), pages 1469-1489, July.
    10. Chandril Bhattacharyya & Manash Ranjan Gupta, 2015. "Unionized Labour Market, Unemployment Allowances, Productive Public Expenditure And Endogenous Growth," Metroeconomica, Wiley Blackwell, vol. 66(3), pages 397-425, July.
    11. Sjögren, Tomas, 2017. "Can a Marginally Distorted Labor Market Improve Capital Accumulation, Output and Welfare?," Umeå Economic Studies 946, Umeå University, Department of Economics.
    12. Chu, Angus C. & Kou, Zonglai & Liu, Xueyue, 2018. "Labor union and the wealth-income ratio," Economics Letters, Elsevier, vol. 167(C), pages 29-35.
    13. Cabo, Francisco & Martín-Román, Ángel L., 2017. "Dynamic collective bargaining. Frictional effects under open-shop industrial relations," MPRA Paper 77562, University Library of Munich, Germany.
    14. Rossi, Lorenza & Mattesini, Fabrizio, 2007. "Productivity Shock and Optimal Monetary Policy in a Unionized Labor Market. Forthcoming: The Manchester School," MPRA Paper 8414, University Library of Munich, Germany, revised 2008.
    15. Bhattacharyya, Chandril & Ranjan Gupta, Manash, 2021. "Unionised labour market, environment and endogenous growth," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 29-44.
    16. Ester Faia & Lorenza Rossi, 2013. "Union Power, Collective Bargaining, And Optimal Monetary Policy," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 408-427, January.
    17. Maiti, Dibyendu & Bhattacharyya, Chandril, 2020. "Informality, enforcement and growth," Economic Modelling, Elsevier, vol. 84(C), pages 259-274.
    18. Colin Davis & Ken-ichi Hashimoto & Ken Tabata, 2021. "Unionization, Industry Concentration, and Economic Growth," ISER Discussion Paper 1154, Institute of Social and Economic Research, Osaka University.
    19. Grieben, Wolf-Heimo & Şener, Fuat, 2017. "Wage bargaining, trade and growth," Research in Economics, Elsevier, vol. 71(3), pages 564-587.
    20. Tetsuo Ono, 2010. "Growth and unemployment in an OLG economy with public pensions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(2), pages 737-767, March.
    21. Afonso, Óscar, 2016. "Effects of labour-market institutions on employment, wages, R&D intensity and growth in 27 OECD countries: From theory to practice," Economic Modelling, Elsevier, vol. 53(C), pages 48-62.
    22. Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2014. "Unionised labour market, efficiency wage and endogenous growth," MPRA Paper 58332, University Library of Munich, Germany.
    23. Francisco Cabo & Angel Martín-Román, 2019. "Dynamic collective bargaining and labor adjustment costs," Journal of Economics, Springer, vol. 126(2), pages 103-133, March.
    24. Óscar Afonso & Tiago Neves Sequeira & Marcelo Santos & Pedro Cunha Neves, 2023. "Global Firms, (de)unionization and Wage Inequality," Open Economies Review, Springer, vol. 34(5), pages 979-1013, November.

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    More about this item

    Keywords

    Managerial trade union; collective bargaining; unemployment; economic growth;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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