Working Paper: CEPR ID: DP3027
Authors: Andreas Irmen; Berthold Wigger
Abstract: A trade union whose purpose is to raise wages above the competitive level may foster economic growth if it succeeds in shifting income away from the owners of capital to the workers and if the workers' marginal propensity to save exceeds that of capitalists. We make this point in an overlapping generations framework with unionized labour. Considering a monopoly union that cares for wages and employment, we determine a range of trade union objectives and characterize the aggregate technology so that the union's policy spurs per capita income growth and increases the welfare of all generations that adhere to the union.
Keywords: employment; endogenous technical change; factor shares; overlapping generations; trade union
JEL Codes: D91; E25; J51; O41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trade Union Objectives (J51) | Economic Growth (O49) |
| Wage Levels (J31) | Economic Growth (O49) |
| Income Distribution (D31) | Economic Growth (O49) |
| Trade Union Objectives (J51) | Income Distribution (D31) |
| Income Distribution (D31) | Wage Levels (J31) |
| Trade Union Objectives (J51) | Wage Levels (J31) |