Subsidising Education with Unionised Labour Markets

Wöhlbier, Florian (March 2002): Subsidising Education with Unionised Labour Markets. Discussion Papers in Economics 2002-2

Abstract

It is well known from the literature that a unionisation of labour markets leads to an increase in wages and a decrease in employment. However, in these models human capital formation is usually taken as given. This paper internalises the education decision and shows that a unionisation of the labour market for unskilled workers will also lead to an inefficiently low education level. We discuss the effects of an education subsidy. It will turn out that both the way of financing and the reaction of the trade union to tax rate changes are crucial for the employment and welfare effects.

• Item Type: Paper
• Keywords: Human Capital ; Unemployment ; Subsidisation
• Faculties: Economics; Economics > Munich Discussion Papers in Economics; Economics > Munich Discussion Papers in Economics > Labor; Economics > Munich Discussion Papers in Economics > Economic Policy; Economics > Munich Discussion Papers in Economics > Public Finance
• Subjects: 300 Social sciences > 300 Social sciences, sociology and anthropology; 300 Social sciences > 330 Economics
• JEL Classification: H20, J51, J24
• Language: English