Fiscal policy in unionized labor markets
By Silvia Ardagna. 2007
121 citations recorded by the source corpus.
This paper investigates the effects of fiscal policy on economic activity, public finances, welfare, and income distribution in a dynamic general equilibrium model with a unionized labor market. The paper shows that debt-financed increases of public employment, wages of public sector employees, unemployment benefits, and labor taxes put pressure on unions’ wage claims, leading to higher private sector wages, lower employment, capital, and output. In addition, increases of public employment, public wages and unemployment benefits increase workers’ utility relative to the pre-policy change equilibrium during the transition, but not in the long-run. Instead, workers’ utility decreases at any time horizon when labor taxes increase. Capitalists always benefit from increases in taxes on labor but their welfare decreases when public spending goes up. Finally, the paper investigates the extent to which the way the government balances its budget affects these results.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/46d818d8a786615b9776cb1dc0e76fa9119458cf
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In Economics and Econometrics
- Pedro Gomes
- António Afonso
- Ricardo M. Sousa
- Candida Ferreira
- Carlos Thomas
- Nikolai Stähler
- Gerry McNamara
- Paul M. Vaaler
Citations in the corpus
- The Design of Fiscal Adjustments (2013, unknown): “[9] Ardagna S.”
- Public and private sector wages interactions in a general equilibrium model (2010, unknown): “ Ardagna (2007) , in a more general model, assumes in the baseline specification that workers receive different salaries in the public and private sectors, but at the same time assumes that there is no mobility of workers between sectors, and thus rules out the existence of potential job market flow”
- Interactions between Private and Public Sector Wages (2014, background): “Ardagna (2007) proposes a dynamic general equilibrium model with a unionised labour market.”
- Public Employment and the Business Cycle (2007, unknown): “The productivity variable yt follows an AR(1) process with mean value of 1, autoregressive parameter of 0.”