A new GLO Discussion Paper finds that the presence of second-level collective bargaining is associated with higher investments in R&D and that power relation is the main mechanism driving this result.
GLO Discussion Paper No. 1195, 2022
GLO Fellow Fabio Landini
Author Abstract: This paper investigates the impact of firm-level collective bargaining on firms’ investment in intangible assets and, specifically R&D. While standard hold-up theories predict a negative effect of organized labour on intangible investments, the inclusion of pay-for-performance schemes in complementary negotiation can actually invert the prediction. Moreover, the industrial relation literature suggests that, in presence of asymmetric power relations, firm-level collective bargaining can allow workers to make their voice heard and induce management to invest in assets that drive competition away from wages, including R&D. We exploit a rich and representative survey on Italian non-agricultural companies conducted by the National Institute for the Analysis of Public Policies (INAPP) to test these predictions. Baseline estimates suggest that the presence of second-level collective bargaining is associated with higher investments in R&D and that power relation is the main mechanism driving this result. These findings are confirmed also in a robustness check where we exploit size contingent legislation governing the creation of employee representative bodies involved in firm-level bargaining in a regression discontinuity design (RDD) framework. The implications for the design of innovation policy are discussed.
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Vol. 36, Issue 1, January 2023: Meet the authors of all 16 articles of this issue online on December 1, 2022 during the GLO Global Conference 2022.
Vol. 35, Issue 4, October 2022: Journal of Population Economics (JOPE): 15 articles https://link.springer.com/journal/148/volumes-and-issues/35-4
CiteScore of JOPE moves up from 3.9 (2020) to 6.5 (2021). LINK
Similar, its Impact Factor is now 4.7 (2021) after 2.8 (2020)! LINK
GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS, EconPapers). Complete list of all GLO DPs – downloadable for free.
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