Shareholder value and equilibrium rate of unemployment

Nicolas Piluso () and Gabriel Colletis ()
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Gabriel Colletis: LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville

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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.

Date: 2012-11-29
Note: View the original document on HAL open archive server: https://hal.science/hal-01672795v1
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Published in Economics Bulletin, 2012, 32 (4), pp.3233-3242

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Journal Article: Shareholder value and equilibrium rate of unemployment (2012)
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