Remuneration Systems

In this paper we analyse the impact of different remuneration systems on capital formation and employment at the sectoral and at the aggregate level. We show that, in general, the switch from a Fixed Wage Economy to a Share Economy results in a lower NAIRU. This conclusion is derived by aggregation of the outcome of a three stage-bargaining game at the sectoral level, in which capital stock and employment are chosen by the firm and wages (or share parameters) are negotiated between firms and unions.