Integration, Labor Market Regulation, Lobbying,and Technological Change

This paper examines an economic union where oligopolistic firms produce by skilled andunskilled labor and do in-house R&D by skilled labor. The planner of the union accepts newmembers to the union, regulates the labor market through a minimum wage for unskilledlabor and supports firms by taxation. Firms and workers lobby the planner for prospectivepolicy. It is shown that in the political equilibrium small unions regulate the labor market butdo not support firms, while large unions deregulate the labor market and support firms....