original: The impact of regional employment subsidies under wage bargaining

Stein Ûstbye
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Stein Ûstbye: The Norwegian College of Fishery Science, University of TromsÛ, N-9037 TromsÛ, Norway

The Annals of Regional Science, 1998, vol. 32, issue 2, 235 pages

Abstract: The purpose of this paper is to empirically assess the impact on employment of regional labour subsidies. A structural model, consistent with cost minimizing behaviour and wage bargaining, is estimated using data on fish-processing firms in Norway. The estimates are consistent with firms minimizing costs and wages being set by an industry level monopoly union. The results suggest that subsidies increase employment considerably. The union only captures a small fraction of the subsidy.

Date: 1998-05-25
Note: Received: March 1995 / Accepted in revised form: May 1997
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