Unionization Structures and Innovation Incentives

No 4079, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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

Keywords: centralization; hold-up; innovation; unions (search for similar items in EconPapers)
JEL-codes: D43 J50 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2003-10
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Working Paper: Unionisation Structures and Innovation Incentives (2004)
Journal Article: Unionisation structures and innovation incentives (2004)
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