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Union, Efficiency of Labour and Endogenous Growth

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  • Bhattacharyya, Chandril
  • Gupta, Manash Ranjan

Abstract

This paper investigates the growth effect of unionization, with a special focus on the ʻEfficiency Wage Hypothesisʼ and on the human capital formation financed publicly by taxation. The employment level becomes independent of the public policy parameters and of the labour market institution parameters when the government chooses the growth rate maximizing tax rate. The growth effect of unionisation is found to be independent of the labour unionʼs orientation in its preference structure. It depends on the net efficiency of the worker. The growth effect of unionisation is different from the corresponding welfare effect.

Suggested Citation

  • Bhattacharyya, Chandril & Gupta, Manash Ranjan, 2020. "Union, Efficiency of Labour and Endogenous Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(2), pages 170-202, December.
    • Handle: RePEc:hit:hitjec:v:61:y:2020:i:2:p:170-202
    DOI: 10.15057/hje.2020008
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    More about this item

    Keywords

    labour union; efficiency wage hypothesis; human capital formation; income tax; endogenous growth;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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