Unionization Structures and Innovation Incentives

Christian Wey and Justus Haucap

No 4079, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper examines how different unionization structures affect firms' innovation incentives and industry employment. We distinguish three modes of unionization with increasing degree of centralization: (1) ?decentralization? where wages are determined independently at the firm-level, (2) ?coordination? where one industry union sets individual wages for all firms, and (3) ?centralization? where an industry union sets a uniform wage rate for all firms. While firms' investment incentives are largest under ?centralization?, investment incentives are non-monotone in the degree of centralization: ?decentralization? carries higher investment incentives than ?coordination?. Labour market policy can spur innovation by decentralizing unionization structures or through non-discrimination rules.

Keywords: Unions; Innovation; Centralization; Hold-up (search for similar items in EconPapers)
JEL-codes: D43 J50 L13 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Unionisation structures and innovation incentives (2004)
Working Paper: Unionisation Structures and Innovation Incentives (2004)
Working Paper: Unionisation Structures and Innovation Incentives (2003)
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