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Parente and Prescott’s Theory may work in practice but does not work in theory

Cozzi, G.; Palacios, L.-P.

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Authors

G. Cozzi

L.-P. Palacios



Abstract

In this paper we challenge Parente and Prescott's (1999) theoretical framework, which establishes that unions use their control of "work practices" to thwart the efficient use of technology in the firms. We argue instead that unions, despite endowing monopoly rights over a technology, should tend to impose its efficient use. In fact if union members care about labor disutility, along with wage incomes, they will dictate "work practices" consistent with operating technology at full efficiency, in order to allow workers to enjoy more leisure. Our result is more general than Parente and Prescott's and does not rely on the particular specification of preferences.

Citation

Cozzi, G., & Palacios, L. (2003). Parente and Prescott’s Theory may work in practice but does not work in theory. BE Journal of Macroeconomics, 3(1), https://doi.org/10.2202/1534-6005.1116

Journal Article Type Article
Online Publication Date Jan 29, 2010
Publication Date Mar 29, 2003
Deposit Date Mar 2, 2010
Publicly Available Date Mar 28, 2024
Journal BE Journal of Macroeconomics
Publisher De Gruyter
Peer Reviewed Peer Reviewed
Volume 3
Issue 1
DOI https://doi.org/10.2202/1534-6005.1116
Keywords Trade unions, Inefficiency, Technological change, Institutions and growth.
Public URL https://durham-repository.worktribe.com/output/1523491
Publisher URL http://www.bepress.com/bejm/contributions/vol3/iss1/art8/

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Copyright © 2003 by the authors. All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written permission
of the publisher, bepress, which has been given certain exclusive rights by the author.
Contributions to Macroeconomics is produced by The Berkeley Electronic Press (bepress).
http://www.bepress.com/bejm




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