Union, efficiency of labour and endogenous growth

Chandril Bhattacharyya () and Manash Gupta ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops an endogenous growth model with human capital formation and ‘Efficiency Wage Hypothesis’ to investigate the growth effect of unionisation and to analyse properties of optimum income tax rate in the presence of an unionised labour market and with taxation only on labour income. ‘Efficient Bargaining’ model as well as ‘Right to Manage’ model is used to solve the negotiation problem between the labour union and the employer’s association. In both type modelling framework, the growth effect of unionisation is independent of its employment effect; and it depends on its net effect on worker’s efficiency. The growth rate maximizing tax rate on labour income is different from the corresponding welfare maximizing tax rate; and the nature of the growth effect of unionisation is different from its welfare effect.

Keywords: Labour union; Efficiency wage hypothesis; Human capital Formation; income tax; Endogenous growth (search for similar items in EconPapers)
JEL-codes: H21 H52 J24 J31 J51 O41 (search for similar items in EconPapers)
Date: 2015-05-15
New Economics Papers: this item is included in nep-gro and nep-lab
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Related works:
Journal Article: Union, Efficiency of Labour and Endogenous Growth (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:64911

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