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
