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Integration, Wage Bargaining, and Growth with Creative Destruction

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  • Tapio Palokangas

Abstract

We construct a Schumpeterian growth model of a common market with following properties. Households can stay as workers or become researchers at some cost. Workers are employed in production and researchers in R&D. Workers are unionized. A larger common market means a wider variety of products and more intensive goods market competition. The main findings are as follows. If the common market is able to carry out extensive labour market reforms, then it should accept new members as long as this increases consumption per capita. If no extensive reforms are feasible, then the common market should respond to excessive union power by accepting new members, which increases competition in the product market.

Suggested Citation

  • Tapio Palokangas, 2004. "Integration, Wage Bargaining, and Growth with Creative Destruction," DEGIT Conference Papers c009_015, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c009_015
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    File URL: http://degit.sam.sdu.dk/papers/degit_09/C009_015.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    integration; wage bargaining; creative destruction;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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