Labor Unions, Unemployment, and Inequality in an OLG-Model with Heterogeneous Agents

Jana Kremer
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Jana Kremer: University of Augsburg, Department of Economics

No 207, Discussion Paper Series from Universitaet Augsburg, Institute for Economics

Abstract: As a consequence of falling relative demand for low skilled labor in the OECD, people with noor minor qualification experience a deterioration of their economic situation. While flexible labormarkets have led to higher wage differentials in the USA, the major problem of most Europeancountries is the high rate of unemployment of the low skilled. To integrate currently discusseddeterminants of wage distribution and unemployment into a common context, labor unionsand qualification differences in labor supply are introduced to an OLG-model with heterogeneousagents. The model generates skill specific unemployment rates and a wage dispersion affectedby production technology, wage setting procedure, and qualification structure of labor supply. As an application of the model, the relative importance of wage dispersion, unemployment,and lifelong learning for economic growth and income distribution can be evaluated.

Keywords: wage and income inequality; unemployment; trade unions; overlapping generations (search for similar items in EconPapers)
JEL-codes: C68 D31 D91 J31 J51 O41 (search for similar items in EconPapers)
Date: 2001-09
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Persistent link: https://EconPapers.repec.org/RePEc:aug:augsbe:0207

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