Impact of Union Bargaining Power on Incentives to Invest in Labor Savings

Abstract

This paper shows the impact of increasing union bargaining power on unions as a result of firms making two types of investments in labor-saving and intermediate goods investments in monopolistic markets. Usually, an increase in the bargaining power of a union has a positive effect on the utility of the union. It also has a negative effect on labor savings investment, but this paper examines how these results change.