IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-349-19795-8_12.html
   My bibliography  Save this book chapter

Trade Unions, Investment and Employment in a Small Open Economy: A Dutch Perspective

In: Unemployment in Europe

Author

Listed:
  • C. B. Mulder
  • F. Ploeg

Abstract

A model of a small open economy with a well-developed supply-side and demand-side is presented. There are many firms engaged in monopolistic competition, who take the wage and aggregate demand as given, when deciding on their labour demand and investment decisions. Aggregate supply depends on capital, the producers’ real wage and aggregate demand; investment depends on what firms expect the real wage, aggregate demand, real interest rates and investment subsidies to be in current and future periods. Aggregate demand depends on disposable income, wealth, public spending, foreign income, the real exchange rate and the world real-interest rate. There is one monopoly union, who chooses the consumers real wage to maximise a utilitarian utility function subject to the constraints describing the rest of the economy. Its behaviour is time inconsistent, since it has an incentive to announce a low wage and then, once capital has been accumulated, renege and cream off the quasi-rent of a more-or-less fixed factor by demanding a higher wage. The time-consistent behaviour is credible but is inefficient due to much lower levels of capital, employment and activity. The results of this analysis are used to describe the Dutch rise in unemployment.

Suggested Citation

  • C. B. Mulder & F. Ploeg, 1989. "Trade Unions, Investment and Employment in a Small Open Economy: A Dutch Perspective," Palgrave Macmillan Books, in: Joan Muysken & Chris Neubourg (ed.), Unemployment in Europe, chapter 8, pages 200-229, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-1-349-19795-8_12
    DOI: 10.1007/978-1-349-19795-8_12
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wansbeek, Tom & Kapteyn, Arie, 1989. "Estimation of the error-components model with incomplete panels," Journal of Econometrics, Elsevier, vol. 41(3), pages 341-361, July.
    2. van der Ploeg, F., 1990. "Towards monetary integration in Europe," Other publications TiSEM 37eede87-4c89-404f-81a4-6, Tilburg University, School of Economics and Management.
    3. Enrico Marchetti, 1999. "Dynamic Games and Growth Cycles in Unionised Economies," Working Papers in Public Economics 32, University of Rome La Sapienza, Department of Economics and Law.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-349-19795-8_12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.