Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34853 
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers No. 3246
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We analyze the stability and dynamics of an overlapping generations model with imperfectly competitive labour markets. By focusing on the right-to-manage wage bargaining we assume that wage is negotiated after the capital stock decision. With Cobb-Douglas utility and production functions the steady state is unique and the steady state capital stock depends positively both on the trade union's bargaining power and on the wage elasticity of labour demand. That elasticity depends either on lower decreasing returns to scale and/or more intensive product market competition. Finally, we show that the steady state equilibrium is a saddle.
Subjects: 
Overlapping generations economy
capital accumulation
flexible wage negotiation
stability and dynamics
JEL: 
J51
Document Type: 
Working Paper

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