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Working Papers (1997), ESSEC Business School

Investment through Retained Earnings and Employment in Transitional Economies

Several studies of the labor market in transitional economies use static or quasi-dynamic trade union models to explain the employment behavior of large firms. One interesting feature of these firms is the massive financing of investment through retained earnings. This paper investigates the consequences of this mechanism on the economic decisions of the union and the firm in a two-period setting. Wage claims may be moderated and employment pushed up. While the union always supports the scheme, the attitude of the firm depends on the workers' alternative income.

VRANCEANU, R. (1997). Investment through Retained Earnings and Employment in Transitional Economies. ESSEC Business School.