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Labor Union and the Wealth-Income Ratio

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  • Chu, Angus C.
  • Kou, Zonglai
  • Liu, Xueyue

Abstract

We explore how labor union affects the wealth-income ratio in an innovation-driven growth model and find that it depends on the union's objective. If the union is employment-oriented (wage-oriented), then a decrease in its bargaining power would have a positive (an ambiguous) effect on the wealth-income ratio. Calibrating the model to data, we find that a decrease in union bargaining power causes a sizable increase in the wealth-income ratio, which explains at least one-third of the increase in the US wealth-income ratio.

Suggested Citation

  • Chu, Angus C. & Kou, Zonglai & Liu, Xueyue, 2017. "Labor Union and the Wealth-Income Ratio," MPRA Paper 84710, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:84710
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    References listed on IDEAS

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    1. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi, 2016. "Unions, innovation and cross-country wage inequality," Journal of Economic Dynamics and Control, Elsevier, vol. 64(C), pages 104-118.
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    Cited by:

    1. Chu, Angus C. & Kou, Zonglai & Wang, Xilin, 2020. "Dynamic effects of minimum wage on growth and innovation in a Schumpeterian economy," Economics Letters, Elsevier, vol. 188(C).
    2. Kim, Daehwan & Nilsen, Jeffrey, 2023. "A Gordon growth formula for wealth-income ratios and its implications on cross-country differences," Finance Research Letters, Elsevier, vol. 58(PD).
    3. Chu, Angus C. & Cozzi, Guido & Furukawa, Yuichi & Liao, Chih-Hsing, 2019. "Effects of Minimum Wage on Automation and Innovation in a Schumpeterian Economy," MPRA Paper 95824, University Library of Munich, Germany.
    4. Xiao Dai & Jian Wu & Liang Yan, 2018. "A Spatial Evolutionary Study of Technological Innovation Talents’ Sticky Wages and Technological Innovation Efficiency Based on the Perspective of Sustainable Development," Sustainability, MDPI, vol. 10(11), pages 1-19, November.
    5. Angus C. Chu & Haichao Fan & Yuichi Furukawa & Zonglai Kou & Xueyue Liu, 2021. "Minimum Wages, Import Status, And Firms' Innovation: Theory And Evidence From China," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 441-458, January.
    6. Chu, Angus C. & Furukawa, Yuichi & Kou, Zonglai & Liu, Xueyue, 2019. "Effects of Minimum Wage on Import and Innovation: Theory and Evidence from China," MPRA Paper 97008, University Library of Munich, Germany.

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    More about this item

    Keywords

    wealth-income ratio; labor union; economic growth;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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