A Note on Endogenous Growth with Public Capital

This paper develops a two sector model of endogenous economic growth with public capital where private goods and public investment goods are produced with different production technologies. The government buys public investment goods produced by private producers; and the government is a monopsonist in this market to determine the price. However, growth rate maximising buying price of public investment good is not identical with the competitive price of the final good and the growth rate maximising income tax rate in the steady state equilibrium is independent of the technology in public good production. It is also shown that the welfare maximising solution is not necessarily identical to the growth rate maximising solution even in the steady state equilibrium

Union, efficiency of labour and endogenous growth

This paper develops an endogenous growth model with human capital formation and ‘Efficiency Wage Hypothesis’ to investigate the growth effect of unionisation and to analyse properties of optimum income tax rate in the presence of an unionised labour market and with taxation only on labour income. ‘Efficient Bargaining’ model as well as ‘Right to Manage’ model is used to solve the negotiation problem between the labour union and the employer’s association. In both type modelling framework, the growth effect of unionisation is independent of its employment effect; and it depends on its net effect on worker’s efficiency. The growth rate maximizing tax rate on labour income is different from the corresponding welfare maximizing tax rate; and the nature of the growth effect of unionisation is different from its welfare effect

Unionised Labour Market, Unemployment Allowances, Productive Public Expenditure and Endogenous Growth

This paper develops a model of endogenous economic growth with special focus on the role of unionized labour market and on the interaction between the tax financed productive public expenditure and unemployment benefit policy of the government. We incorporate a ‘Managerial’ labour union in an otherwise identical Barro (1990) model; and use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem between a labour union and an employers’ association. Properties of growth rate maximizing income tax policy are derived in the steady state equilibrium; and the effects of unionization are analysed on the level of employment, growth rate, welfare and on tax rate respectively. This growth rate maximizing income tax rate appears to be higher than (equal to) the competitive output share of public input in the presence (absence) of unemployment benefit. Unionisation may be good or bad for the economy in the case of Efficient bargaining model; and the nature of the effect depends on the orientation of the labour union. However, this is always bad for both employment and growth in the case of a ‘Right to Manage’ model

Unionised labour market, efficiency wage and endogenous growth

In this paper, we analyse the effect of unionisation on the growth of the economy in the presence of ‘Efficiency Wage Hypothesis’. We use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem. Unionisation raises negotiated wage rate and the effort (efficiency) level of the worker. In the case of ‘efficient bargaining model’, unionisation reduces the negotiated number of workers but improves the effort level when the union is neutral in its orientation. As a result, effective employment is increased; and this leads to a rise in the growth rate and welfare level of the economy. However, in the ‘Right to manage model’ of bargaining, unionisation in the labour market raises the effort level of worker but lowers the number of workers irrespective of the orientation of the labour union; and raises effective employment, balanced growth rate and welfare level if the wage elasticity of efficiency is greater than the unemployment rate

Unionised Labour Market, Unemployment Allowances, Productive Public Expenditure and Endogenous Growth

This paper develops a model of endogenous economic growth with special focus on the role of unionized labour market and on the interaction between the tax financed productive public expenditure and unemployment benefit policy of the government. We incorporate a ‘Managerial’ labour union in an otherwise identical Barro (1990) model; and use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem between a labour union and an employers’ association. Properties of growth rate maximizing income tax policy are derived in the steady state equilibrium; and the effects of unionization are analysed on the level of employment, growth rate, welfare and on tax rate respectively. This growth rate maximizing income tax rate appears to be higher than (equal to) the competitive output share of public input in the presence (absence) of unemployment benefit. Unionisation may be good or bad for the economy in the case of Efficient bargaining model; and the nature of the effect depends on the orientation of the labour union. However, this is always bad for both employment and growth in the case of a ‘Right to Manage’ model

Unionised labour market, environment and endogenous growth

In this paper, a model of endogenous economic growth is developed with special focus on the interaction between unionized labour market and environmental pollution. We introduce a trade union; and use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem. Environmental pollution is the result of production; and the labour union bargains not only for wage and employment but also for the protection of environment. We derive properties of optimum income tax policy while financing abatement expenditure; and also analyse the effects of unionization on the level of employment and on growth rate. It appears that the optimum rate of income tax varies inversely with the relative bargaining power of the labour union. An increase in the relative bargaining power of the labour union may enhance employment in ‘Efficient Bargaining’ model if the labour union is highly employment oriented. However, the union always forces the firm to raise the spending rate for environment protection. So, unionisation may raise the growth rate, even if the first effect is negative, but the second effect dominates the first effect

Unionised labour market, environment and endogenous growth

In this paper, a model of endogenous economic growth is developed with special focus on the interaction between unionized labour market and environmental pollution. We introduce a trade union; and use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem. Environmental pollution is the result of production; and the labour union bargains not only for wage and employment but also for the protection of environment. We derive properties of optimum income tax policy while financing abatement expenditure; and also analyse the effects of unionization on the level of employment and on growth rate. It appears that the optimum rate of income tax varies inversely with the relative bargaining power of the labour union. An increase in the relative bargaining power of the labour union may enhance employment in ‘Efficient Bargaining’ model if the labour union is highly employment oriented. However, the union always forces the firm to raise the spending rate for environment protection. So, unionisation may raise the growth rate, even if the first effect is negative, but the second effect dominates the first effect

Unionised labour market, efficiency wage and endogenous growth

In this paper, we analyse the effect of unionisation on the growth of the economy in the presence of ‘Efficiency Wage Hypothesis’. We use both ‘Efficient Bargaining’ model and ‘Right to Manage’ model to solve the negotiation problem. Unionisation raises negotiated wage rate and the effort (efficiency) level of the worker. In the case of ‘efficient bargaining model’, unionisation reduces the negotiated number of workers but improves the effort level when the union is neutral in its orientation. As a result, effective employment is increased; and this leads to a rise in the growth rate and welfare level of the economy. However, in the ‘Right to manage model’ of bargaining, unionisation in the labour market raises the effort level of worker but lowers the number of workers irrespective of the orientation of the labour union; and raises effective employment, balanced growth rate and welfare level if the wage elasticity of efficiency is greater than the unemployment rate

Union, efficiency of labour and endogenous growth

This paper develops an endogenous growth model with human capital formation and ‘Efficiency Wage Hypothesis’ to investigate the growth effect of unionisation and to analyse properties of optimum income tax rate in the presence of an unionised labour market and with taxation only on labour income. ‘Efficient Bargaining’ model as well as ‘Right to Manage’ model is used to solve the negotiation problem between the labour union and the employer’s association. In both type modelling framework, the growth effect of unionisation is independent of its employment effect; and it depends on its net effect on worker’s efficiency. The growth rate maximizing tax rate on labour income is different from the corresponding welfare maximizing tax rate; and the nature of the growth effect of unionisation is different from its welfare effect