Subsidizing extra jobs: promoting employment by taming the unions
"We study the subsidization of extra jobs in a general equilibrium framework. While the previous literature focuses on symmetric marginal employment subsidies where firms are rewarded when they increase employment but punished when they reduce their workforce, we consider an asymmetric scheme t...
| Main Authors: | , |
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| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Munich
2007
CESifo |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19291866124910190489-Subsidizing-extra-jobs-promoti.htm |
| _version_ | 1771659901663182849 |
|---|---|
| author | Knabe, Andreas Schöb, Ronnie |
| author_facet | Knabe, Andreas Schöb, Ronnie |
| collection | Library items |
| description | "We study the subsidization of extra jobs in a general equilibrium framework. While the previous literature focuses on symmetric marginal employment subsidies where firms are rewarded when they increase employment but punished when they reduce their workforce, we consider an asymmetric scheme that only rewards employment expansion. This changes the incidence substantially. In the asymmetric case without punishment, it becomes less costly for firms to lay off a substantial fraction of their workforce when trade unions raise wages. This tames the unions, which causes wage moderation and raises aggregate employment and welfare. For moderate subsidy rates, all unions prefer to restrain their wage claims. At sufficiently high subsidy rates, labor market conditions improve so much that some unions enforce higher wages and let their firms shrink. This displacement of firms might have a negative impact on employment and welfare." |
| format | TEXT |
| id | 19291866124910190489_3c7240f7cc594ef3bcf5a1d36e7cd963 |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 19291866124910190489_3c7240f7cc594ef3bcf5a1d36e7cd963 |
| is_hierarchy_title | Subsidizing extra jobs: promoting employment by taming the unions |
| language | English |
| physical | 34 p. Digital |
| publishDate | 2007 |
| publisher | Munich CESifo |
| spellingShingle | Knabe, Andreas Schöb, Ronnie promotion of employment trade union role wages employment subsidy Subsidizing extra jobs: promoting employment by taming the unions |
| thumbnail | https://www.labourline.org/Image_prev.jpg?Archive=117427993560 |
| title | Subsidizing extra jobs: promoting employment by taming the unions |
| topic | promotion of employment trade union role wages employment subsidy |
| url | https://www.labourline.org/KENTIKA-19291866124910190489-Subsidizing-extra-jobs-promoti.htm |