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Unions and Firms' Investments: A Unified View

Fabio Berton (), Stefano Dughera and Andrea Ricci ()
Additional contact information
Stefano Dughera: University Paris Ouest-Nanterre
Andrea Ricci: INAPP – Institute for Public Policy Analysis

No 12515, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we present a simple model in which a unionized and non-unionized firm optimally make investment decisions given their labor productivity. By allowing workers' organizations to have positive effects on labor effort, we find that the classic hold-up problem does not necessarily survive. We also derive conditions under which rent-seeking by unions may actually encourage firms' investments.

Keywords: labor unions; rent seeking; workers' effort; firms' investments; hold-up (search for similar items in EconPapers)
JEL-codes: J51 O31 O32 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2019-07
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