HOW POWERFUL ARE TRADE UNIONS? A SKILL-BIASED TECHNOLOGICAL CHANGE APPROACH

• Type: Article in International Scientific Journal
• Date: 2019

Authors

Neto, A (Author) Other; Óscar Afonso (Author) FEP; Silva, ST (Author) FEP

Journal

Title: Macroeconomic Dynamics

Vol. 23

Pages: 730-774

ISSN: 1365-1005

Publisher: Cambridge University Press

Indexing

ISI Web of Knowledge - 14 Citations

Scopus - 16 Citations

Other information

Authenticus ID: P-00Q-5YX

DOI: 10.1017/s1365100516001346

Abstract (EN): This paper proposes a new theoretical framework aimed at understanding the link between technological change, skill premium, and employment. We build an endogenous growth model of directed technological change with vertical research and development (R&D) in which low-skilled workers might be organized in a trade union. This union can act as a monopoly seller of labor and decide unilaterally the low-skilled wage, or as a managerial union that bargains wage and employment with the employers' federation, i.e., firms. Our results suggest that (i) the impacts of trade unions on technological-bias and on the level of (un)employment crucially depend on their type and preferences; and (ii) trade unions can actually increase low-skilled wages and employment if they have some bargaining power and are employment-oriented. Furthermore, our framework provides some highlights to explain the relationship between wage dispersion and the deunionization process that occurred in the United Kingdom and the United States during the 1980s.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 45