Shareholder value and equilibrium rate of unemployment

Nicolas Piluso () and Gabriel Colletis ()
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Gabriel Colletis: LEREPS Université Capitole Toulouse 1

Economics Bulletin, 2012, vol. 32, issue 4, 3233-3242

Abstract: The aim of this article is to analyse the consequences of the constraint of shareholder value creation on wages and on unemployment rates in equilibrium. We will show that the shareholder value created by a firm directly depends on the payroll. Therefore, both the firm's and the Unions' new maximisation programs are considerably modified. The main result of this analysis is that a switch from profit maximisation to EVA maximisation leads to an increase in unemployment rates. Furthermore, the unemployment rate now depends on new financial variables.

Keywords: equilibrium unemployment; shareholder value; equilibrium wages; trade-union negotiations (search for similar items in EconPapers)
JEL-codes: E2 J2 (search for similar items in EconPapers)
Date: 2012-11-29
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Citations: View citations in EconPapers (3)

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Working Paper: Shareholder value and equilibrium rate of unemployment (2012)
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