University of Helsinki
Abstract. This paper examines an economic union where oligopolistic firms produce by skilled and unskilled labor and do in-house R&D by skilled labor. The planner of the union accepts new members to the union, regulates the labor market through a minimum wage for unskilled labor and supports firms by taxation. Firms and workers lobby the planner for prospective policy. It is shown that in the political equilibrium small unions regulate the labor market but do not support firms, while large unions deregulate the labor market and support firms. Journal of Economic Literature: F15, J50, O40.
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This paper is presented in
1. the HECER_Political_Economy_Conference, March 13-14, 2009, Helsinki, Finland
2. the IFAC 2011 Conference, August 28 – September 2, 2011, Milan, Italy