Working Paper: CEPR ID: DP7919
Authors: Kjell Erik Lommerud; Odd Rune Straume
Abstract: We analyse how different labour market institutions--employment protection versus ?flexicurity?--affect technology adoption in unionised firms. We consider trade unions? incentives to oppose or endorse labour-saving technology and firms? incentives to invest in such technology. Increased flexicurity--interpreted as less employment protection and a higher reservation wage for workers--unambiguously increases firms? incentives for technology adoption. If unions have some direct influence on technology, a higher reservation wage also makes unions more willing to accept technological change. Less employment protection has the opposite effect, since this increases the downside (job losses) of labour-saving technology.
Keywords: employment protection; flexicurity; technology adoption; trade unions
JEL Codes: J38; J51; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased flexicurity (J68) | firms' incentives to adopt labour-saving technology (O31) |
| lower cost of employment protection and higher reservation wage (J39) | increased flexicurity (J68) |
| stronger employment protection (J89) | perceived risks of job losses associated with technology adoption (O33) |
| stronger employment protection (J89) | unions' likelihood to accept technology changes (J51) |
| flexicurity (J68) | unions' willingness to accept technology (J51) |
| flexicurity and employment protection (J68) | technology adoption (O33) |