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The Struggle for Rents in a Schumpterian Economy

Henri de Groot ()

No 1996-51, Discussion Paper from Tilburg University, Center for Economic Research

Abstract: This paper develops a two-sector endogenous growth model with a dual labour market. Trade unions strive for the extraction of as high a rent as possible from the growth generating imperfectly competitive primary sector. This union behaviour results in a non-competitive wage differential between the primary and secondary (perfectly competitive) sector. The consequence of this distortion is the coming about of wait unemployment, i.e., unemployed queuing for high-paid jobs. Employment and growth are negatively dependent on the relative strength of the union. An increase in concentration in the high-tech sector is good for growth and employment.

Keywords: endogenous growth; trade unions; unemployment; dual labour markets; non-competitive wage differentials (search for similar items in EconPapers)
JEL-codes: E24 J21 J51 O41 (search for similar items in EconPapers)
Date: 1996
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