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Trade Unions, Investment and Employment in a Small Open Economy: A Dutch Perspective*
Published online by Cambridge University Press: 17 August 2016
Extract
1. INTRODUCTION
Like in most European countries, unemployment in Holland has increased considerably in the past ten, fifteen years. This phenomenon is of major concern and warrants explanation. This paper sets out to explain employment and unemployment in a small open economy with powerful trade unions. It provides a framework in which various essential features of a small open economy, like Holland, are imbedded. World trade is a dominating factor on the demand side, whereas unions and long-run labour supply are dominating factors on the supply side. The various instruments the government has available (tax rates, levels of benefits, investment subsidies, public sector expenditure and employment) affect both sides of the economy. The investment behaviour of firms is an important link between present and future.
The formal framework developed in this paper consists of a model with a well developed supply side and a demand side. The supply side is built around rums engaged in monopolistic competition. This provides a role for demand. The firms take the wage rates and aggregate demand as given when deciding on their labour demand and investment decisions.
- Type
- Research Article
- Information
- Recherches Économiques de Louvain/ Louvain Economic Review , Volume 52 , Issue 3-4: Symposium on Unemployment in Europe , December 1986 , pp. 313 - 338
- Copyright
- Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1986
Footnotes
*
An earlier version of this paper was presented at a conference on «Unemployment in Europe», Limburg University, Maastricht, 17-19 April 1986. We are grateful for the comments of the participants and in particular thank Piet Keizer for his discussion of the paper.
References
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