The impact of deunionization on the growth and dispersion of productivity and pay

It’s where you work: increases in the dispersion of earnings across establishments and individuals in the United States

Giovanni Dosi, Richard Freeman, Marcelo Pereira, Andrea Roventini and Maria Enrica Virgillito

Industrial and Corporate Change, 2021, vol. 30, issue 2, 377-408

Abstract: This article presents an Agent-Based Model (ABM) that seeks to explain the concordance of sluggish growth of productivity and of real wages found in macroeconomic statistics, and the increased dispersion of firm productivity and worker earnings found in micro level statistics in advanced economies at the turn of the 21st century. It shows that a single market process unleashed by the decline of unionization can account for both the macro- and micro-economic phenomena, and that deunionization can be modeled as an endogenous outcome of competition between high wage firms seeking to raise productive capacity and low productivity firms seeking to cut wages. The model highlights the antipodal competitive dynamics between a “winner-takes-all economy” in which corporate strategies focused on cost reductions lead to divergence in productivity and wages and a “social market economy” in which competition rewards the accumulation of firm-level capabilities and worker skills with a more egalitarian wage structure.

JEL-codes: C63 E02 E24 J51 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The Impact of Deunionization on the Growth and Dispersion of Productivity and Pay (2020)
Working Paper: The impact of deunionization on the growth and dispersion of productivity and pay (2020)
Working Paper: The impact of deunionization on the growth and dispersion of productivity and pay (2020)
Working Paper: The Impact of Deunionization on the Growth and Dispersion of Productivity and Pay (2020)
Working Paper: The Impact of Deunionization on the Growth and Dispersion of Productivity and Pay (2020)
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