Economics, Econometrics and Finance
4 years ago

Innovative wage bargaining leads to economic growth but job loss in US.

SSRN Electronic Journal
Wage Bargaining and Induced Technical Change in a Linear Economy: Model and Application to the US, 1963-2003
Daniele Tavani

Paper Summary

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The article explores how wages and technology choices impact the economy. Firms decide on technology to reduce costs, while wages are set through bargaining. The economy reaches a stable state with consistent labor employment and input shares. The model matches US data from 1963-2003, showing cyclical patterns. Changes in workers' bargaining power affect output growth positively but employment negatively.