Employment Protection Versus Flexicurity: On Technology Adoption in Unionised Firms

23 Pages Posted: 28 Feb 2012

See all articles by Kjell Erik Lommerud

Kjell Erik Lommerud

affiliation not provided to SSRN

Odd Rune Straume

University of Minho - Economic Policies Research Unit (NIPE); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2012

Abstract

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, as this increases the downside (job losses) of labour‐saving technology.

Keywords: Technology adoption, trade unions, employment protection, flexicurity

JEL Classification: J38, J51, O33

Suggested Citation

Lommerud, Kjell Erik and Straume, Odd Rune, Employment Protection Versus Flexicurity: On Technology Adoption in Unionised Firms (March 2012). The Scandinavian Journal of Economics, Vol. 114, Issue 1, pp. 177-199, 2012, Available at SSRN: https://ssrn.com/abstract=2012172 or http://dx.doi.org/10.1111/j.1467-9442.2011.01663.x

Kjell Erik Lommerud (Contact Author)

affiliation not provided to SSRN

No Address Available

Odd Rune Straume

University of Minho - Economic Policies Research Unit (NIPE) ( email )

Campus de Gualtar
Braga, 4710-057
Portugal

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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