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Shareholder value and equilibrium rate of unemployment

Author

Listed:
  • Nicolas Piluso

    (CERTOP Université Paul Sabatier Toulouse 3)

  • Gabriel Colletis

    (LEREPS Université Capitole Toulouse 1)

Abstract

The aim of this article is to analyse the consequences of the constraint of shareholder value creation on wages and on unemployment rates in equilibrium. We will show that the shareholder value created by a firm directly depends on the payroll. Therefore, both the firm's and the Unions' new maximisation programs are considerably modified. The main result of this analysis is that a switch from profit maximisation to EVA maximisation leads to an increase in unemployment rates. Furthermore, the unemployment rate now depends on new financial variables.

Suggested Citation

  • Nicolas Piluso & Gabriel Colletis, 2012. "Shareholder value and equilibrium rate of unemployment," Economics Bulletin, AccessEcon, vol. 32(4), pages 3233-3242.
    • Handle: RePEc:ebl:ecbull:eb-12-00165
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    References listed on IDEAS

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    Cited by:

    1. Nicolas Piluso & Gabriel Colletis, 2021. "A Keynesian reformulation of the WS-PS model: Keynesian unemployment and Classical unemployment," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(2), pages 447-460, July.
    2. Nicolas Piluso, 2024. "Tobin's Q and shareholder value: Does “shareholder return” impede investment?," Post-Print hal-04699405, HAL.

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    More about this item

    Keywords

    equilibrium unemployment; shareholder value; equilibrium wages; trade-union negotiations;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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