Unionized Labour Market, Unemployment Allowances, Productive Public Expenditure And Endogenous Growth

Abstract

An endogenous growth model with unionised labour market is developed to analyse the interaction between the tax financed productive public expenditure policy and the unemployment benefit policy. We consider both Efficient Bargaining model and Right to Manage model; and analyse properties of balanced growth rate maximising income tax policy as well as effects of unionisation. This growth rate maximising income tax rate exceeds the competitive output share of the public input in the presence of an unemployment benefit scheme. The growth effect of unionisation in the Efficient Bargaining model and in the Right to Manage model are different.

Unemployment, growth and welfare effects of labor market reforms

“…Structural rigidities can be referred to government legislation on minimum wages, mandated firing costs, unemployment benefits, collective bargaining, and Shapiro-Stiglitz style efficiency wages. A large number of studies focusing on one or two of these rigidities have been made in recent years, which include Varga et al (2014), Bhattacharyya and Gupta (2015) and Chang and Hung (2016) on the collective bargaining front, and Bucci et al (2003), Meckl (2004), Parello (2011), and Zagler (2011) on the efficiency wage front. 1 A key result from the literature is that the relationship between growth and unemployment may be weak, both on impact and in the long run.…”

Competitive Exchange Rate and Public Infrastructure in a Macrodynamic of Economic Growth

“…The government taxes the 2 As further remarked by Barro (1990), provided that the government and the private sector share the same production functions, the qualitative results would be the same if the government purchases private inputs and carries out its own production, instead of buying only final output from the private sector. Public infrastructure is also parsimoniously modeled as a flow variable, for instance, in Rivas (2003), Ohdoi (2007), Ag enor (2007), Afonso et al (2014) and Bhattacharyya and Gupta (2015). Public infrastructure is modeled as a stock variable, for instance, in Futagami et al (1993) and Turnovsky (2004), while Greiner (1999) presents an endogenous growth model similar to those in Barro (1990) and Futagami et al (1993), but assuming that productive government spending can be divided between investment in public capital and subsidies for private investment.…”

“…Public infrastructure is also parsimoniously modeled as a flow variable, for instance, in Rivas (), Ohdoi (), Agénor (), Afonso et al . () and Bhattacharyya and Gupta (). Public infrastructure is modeled as a stock variable, for instance, in Futagami et al .…”

The Nash bargaining solution in labor market analysis

“…Recent applications includeAlbert and Meckl (2003),Bhattacharyya and Gupta (2015),Buccella and Wang (2021),Chaudhuri (2016),Cogliano et al (2016), de Pinto and Lingen (2019),Dobbelaere and Kiyota (2018),Falch (2001),Fanti and Buccella (2019),Fuest and Thum (2001),Jayadev (2007),Julius (2009),Kraft et al (2011),Lechthaler and Snower (2012),Merkl and Schmitz (2011),Montagna and Nocco (2015),Meccheri and Fanti (2018) Sattinger and Hartog (2013),Tavani (2012Tavani ( , 2013 andZiesemer (2005).…”