Labor Union and the Wealth-Income Ratio

Angus Chu, Zonglai Kou and Xueyue Liu

MPRA Paper from University Library of Munich, Germany

Abstract: We explore how labor union affects the wealth-income ratio in an innovation-driven growth model and find that it depends on the union's objective. If the union is employment-oriented (wage-oriented), then a decrease in its bargaining power would have a positive (an ambiguous) effect on the wealth-income ratio. Calibrating the model to data, we find that a decrease in union bargaining power causes a sizable increase in the wealth-income ratio, which explains at least one-third of the increase in the US wealth-income ratio.

Keywords: wealth-income ratio; labor union; economic growth (search for similar items in EconPapers)
JEL-codes: D31 J5 O3 O43 (search for similar items in EconPapers)
Date: 2017-11
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Journal Article: Labor union and the wealth-income ratio (2018)
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