Labour Unions, Capital Accumulation, and the Natural Rate of Unemployment

Claus Thustrup Hansen
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Claus Thustrup Hansen: Institute of Economics, University of Copenhagen
Authors registered in the RePEc Author Service: Claus Thustrup Kreiner

No 95-02, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: This paper develops a dynamic general equilibrium model combining standard theory of labour unions and capital accumulation. Comparison of results stemming from labour unions and perfect competition in the labour market shows that predictions regarding growth rates during transition are independent of the labour market institution. However, levels of capital, production, and consumption are proportionally lower at all points in time, if workers are organized in unions. Contrary to other dynamic models unemployment exists in steady state and is constant over time. Contrary to standard union theory real wages are independent of unemployment benefits and type of labour market institution.

Pages: 14 pages
Date: 1995-01
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:9502

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