Labour Market Regulation, Productivity-Improving R&D and Endogenous Growth

Tapio Palokangas

No 720, IZA Discussion Papers from IZA Network @ LISER

Abstract: We present a growth model in which R&D increases productivity, union-firm bargaining determines the distribution of rents and the government can support unions by labour market regulation. We show that if unions are initially very strong, regulation increases only the workers’ profit share and has no impact on employment and growth. Otherwise, regulation increases wages. Because firms try to escape this cost increase through the improvement of productivity by R&D, the economy grows faster. Regulation (deregulation) is desirable when the growth rate is below (above) some critical level.

Keywords: regulation; labour unions; endogenous growth (search for similar items in EconPapers)
JEL-codes: J50 O40 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2003-02
New Economics Papers: this item is included in nep-dev and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published as "Union-Firm Bargaining, Productivity Improvement and Endogenous Growth" in: Labour, 2004, 18 (2), 191-205

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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp720

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