Munich Personal RePEc Archive

Rent-seeking measurement in coal mining by means of labour unrest: an application of the distance function

Rodriguez-Alvarez, Ana and Del Rosal, Ignacio and Baños Pino, Jose (2002): Rent-seeking measurement in coal mining by means of labour unrest: an application of the distance function. Published in: Journal of Productivity Analysis , Vol. 1, No. 27 (2007): pp. 73-83.

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Abstract

We propose a method based on the distance function to empirically estimate the social cost arising from rent seeking behaviour in declining industries. Due to import competition, the factors of a particular industry undergo losses in real income, and have incentives to seek protection. In the case of declining industries, workers play a central role and the losses in output due to strikes are used to quantify the social cost of rent seeking. In our model, strikes are considered as a “bad” input into the production process. We apply our approach to the case of Spanish coal mining. We have estimated a system of equations formed by the input distance function and cost share equations using annual data over the period 1974-1997. This procedure has allowed us to calculate the cost that strikes have imposed on the sector

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