The impact of deunionization on the growth and dispersion of productivity and pay

Giovanni Dosi, Richard Freeman, Marcelo Pereira, Andrea Roventini and Maria Enrica Virgillito
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Marcelo Pereira: Institute of Economics of Sant'Anna [Pisa] - SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa], UNICAMP - Universidade Estadual de Campinas = University of Campinas

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Abstract: This article presents an Agent-Based Model (ABM) that seeks to explain the concordance of sluggish growth of productivity and of real wages found in macroeconomic statistics, and the increased dispersion of firm productivity and worker earnings found in micro level statistics in advanced economies at the turn of the 21st century. It shows that a single market process unleashed by the decline of unionization can account for both the macro- and micro-economic phenomena, and that deunionization can be modeled as an endogenous outcome of competition between high wage firms seeking to raise productive capacity and low productivity firms seeking to cut wages. The model highlights the antipodal competitive dynamics between a "winner-takes-all economy" in which corporate strategies focused on cost reductions lead to divergence in productivity and wages and a "social market economy" in which competition rewards the accumulation of firm-level capabilities and worker skills with a more egalitarian wage structure.

Keywords: Simulation Modeling; Institutions; Macroeconomy; Wages; Trade Unions (search for similar items in EconPapers)
Date: 2020-12-30
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Citations: View citations in EconPapers (1)

Published in Industrial and Corporate Change, 2020, 30 (2), pp.377-408. ⟨10.1093/icc/dtaa025⟩

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Related works:
Journal Article: The impact of deunionization on the growth and dispersion of productivity and pay (2021)
Working Paper: The Impact of Deunionization on the Growth and Dispersion of Productivity and Pay (2020)
Working Paper: The impact of deunionization on the growth and dispersion of productivity and pay (2020)
Working Paper: The Impact of Deunionization on the Growth and Dispersion of Productivity and Pay (2020)
Working Paper: The Impact of Deunionization on the Growth and Dispersion of Productivity and Pay (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04090320

DOI: 10.1093/icc/dtaa025

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