Unionisation Structures and Innovation Incentives

17 Pages Posted: 11 Jul 2004

See all articles by Justus Haucap

Justus Haucap

Heinrich Heine University Dusseldorf - Department of Economics; German Institute for Economic Research (DIW Berlin)

Christian Wey

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE)

Abstract

This paper examines how different unionisation structures affect firms' innovation incentives and industry employment. We distinguish three modes of unionisation with increasing degree of centralisation: (1) 'decentralisation' where wages are determined independently at the firm-level, (2) 'coordination' where one industry union sets individual wages for all firms and (3) 'centralisation' where an industry union sets a uniform wage rate for all firms. While firms' investment incentives are largest under 'centralisation', investment incentives are non-monotone in the degree of centralisation: 'decentralisation' carries higher investment incentives than 'coordination'. Labour market policy can spur innovation by decentralising unionisation structures or through non-discrimination rules.

Suggested Citation

Haucap, Justus and Wey, Christian, Unionisation Structures and Innovation Incentives. Economic Journal, Vol. 114, No. 494, pp. C149-C165, March 2004. Available at SSRN: https://ssrn.com/abstract=547508

Justus Haucap (Contact Author)

Heinrich Heine University Dusseldorf - Department of Economics ( email )

Duesseldorf
Germany

HOME PAGE: http://www.dice.uni-duesseldorf.de

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Christian Wey

University of Düsseldorf - Düsseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany
+49-211-81-15009 (Phone)
+49-211-81-15499 (Fax)

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