Integration, Wage Bargaining, and Growth with Creative Destruction

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 07.09.2004, 12:15 - 13:30

   

Presentation by 

Tapio K. Palokangas (University of Helsinki)
   

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.

   
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