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Labor Unions, Unemployment, and Inequality in an OLG-Model with Heterogeneous Agents

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Abstract

As a consequence of falling relative demand for low skilled labor in the OECD, people with noor minor qualification experience a deterioration of their economic situation. While flexible labormarkets have led to higher wage differentials in the USA, the major problem of most Europeancountries is the high rate of unemployment of the low skilled. To integrate currently discusseddeterminants of wage distribution and unemployment into a common context, labor unionsand qualification differences in labor supply are introduced to an OLG-model with heterogeneousagents. The model generates skill specific unemployment rates and a wage dispersion affectedby production technology, wage setting procedure, and qualification structure of labor supply. As an application of the model, the relative importance of wage dispersion, unemployment,and lifelong learning for economic growth and income distribution can be evaluated.

Suggested Citation

  • Jana Kremer, 2001. "Labor Unions, Unemployment, and Inequality in an OLG-Model with Heterogeneous Agents," Discussion Paper Series 207, Universitaet Augsburg, Institute for Economics.
    • Handle: RePEc:aug:augsbe:0207
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    References listed on IDEAS

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    More about this item

    Keywords

    wage and income inequality; unemployment; trade unions; overlapping generations;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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