Fabio Berton

University of Turin

Unions and firms’ investments. A unified view

Fabio Berton, University of Turin
Stefano Dughera, University of Paris-Nanterre and University of Turin
Andrea Ricci, National Institute for Public Policies Analysis (INAPP)

» Full paper: ilera-2019-paper-140-Berton_1.pdf

In this paper, we present a simple model in which a unionized and non-unionized firm optimally make investment decisions given their labour productivity. By allowing workers’ organizations to have positive effects on labour 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: Labour Unions, Rent seeking, Workers’ effort, Firms’ investments, Hold-up

JEL: J51, O31, O32

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