Working Paper BETA #2009-03

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Title : Bargaining structures, rent-seeking effect and endogenous growth

Author(s) : Isabelle TERRAZ

Abstract : Market power of workers on wages is bound to affect economic performances. This paper focuses on this issue and analyse the influence of bargaining structures on growth and labor market functioning. To achieve this, we construct an endogenous growth model where growth appears as the result of a learning-by-doing process whereas imperfect information in the labor market implies matching frictions in the hiring process. If investment occurs before wage bargaining, the growth process can be durably altered. In this case, a higher bargaining power of worker does not give a clear-cut effect on growth.

Key-words : Bargaining structures; Equilibrium Unemployment; Endogenous growth; Learning-by-doing

JEL Classification : E24; J50; J64; O40