The effects of unionization in an R&D growth model with (In)determinate equilibrium

This paper extends an R&D-based growth model of the Rivera-Batiz and Romer-type [Quarterly Journal of Economics 106 (1991) 531] endogenous growth model by embodying a union with elastic labor to investigate the effects of unionization on employment and growth by highlighting the essence of internal conflict within the union. It is shown that an increase in the union’s bargaining power or a union which is more employment-oriented boosts employment and economic growth when the balanced growth equilibrium is determinate. On the other hand, if the union is more wage-oriented, employment and economic growth are enhanced when the balanced growth equilibrium is indeterminate.