DP7919 Employment protection versus flexicurity: on technology adoption in unionised firms
|Author(s):||Kjell Erik Lommerud, Odd Rune Straume|
|Publication Date:||July 2010|
|Keyword(s):||Employment protection, Flexicurity, Technology adoption, Trade unions|
|JEL(s):||J38, J51, O33|
|Programme Areas:||Labour Economics, Public Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=7919|
We analyse how different labour market institutions--employment protection versus ‘flexicurity’--affect technology adoption in unionised firms. We consider trade unions’ incentives to oppose or endorse labour-saving technology and firms’ incentives to invest in such technology. Increased flexicurity--interpreted as less employment protection and a higher reservation wage for workers--unambiguously increases firms’ incentives for technology adoption. If unions have some direct influence on technology, a higher reservation wage also makes unions more willing to accept technological change. Less employment protection has the opposite effect, since this increases the downside (job losses) of labour-saving technology.