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Wey, Christian
Haucap, Justus
Year of Publication: 
Series/Report no.: 
DIW Discussion Papers No. 398
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
This paper examines how different unionisation structures affect firms' innovation incen- tives 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.
Document Type: 
Working Paper

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