Shareholder Value and Equilibrium Rate of Unemployment

Colletis, Gabriel and Piluso, Nicolas (2012) Shareholder Value and Equilibrium Rate of Unemployment. Economics Bulletin, 32 (4).

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The aim of this article is to analyse the consequences of the constraint of shareholder value creation on wages and on unemployment rates in equilibrium. We will show that the shareholder value created by a firm directly depends on the payroll. Therefore, both the firm's and the Unions' new maximisation programs are considerably modified. The main result of this analysis is that a switch from profit maximisation to EVA maximisation leads to an increase in unemployment rates. Furthermore, the unemployment rate now depends on new financial variables.

Item Type: Article
Language: English
Date: 2012
Refereed: Yes
Uncontrolled Keywords: equilibrium unemployment, trade-union negotiations, equilibrium wages, shareholder value
JEL codes: A1 - General Economics
Divisions: Laboratoire d'études et de recherches sur l'économie, les politiques et les systèmes sociaux - LEREPS
Site: IEP
Date Deposited: 24 May 2013 13:51
Last Modified: 26 May 2016 16:20

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