Underemployment, irreversibilities and growth under Trade Unionism

(eng) The effects of irreversibility and uncertainty are analyzed in a unionized economy with overlapping generations. Irreversible decisions about technology and physical and human capital are made under uncertainty and generate underutilization of labor and equipment not only over the convergence path, but also at steady state. The related inefficiency negatively affects the accumulation process by reducing the per-capita capital stock at teady state. The effect of union power on capital is ambiguous and depends crucially on the presence of irreversible decisions.