International trade and economic integration when labour markets are generally unionised

Naylor, Robin

doi:10.1016/s0014-2921(97)00075-5

Cited by 147 publications

(182 citation statements)

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“…Beyond the effect of a movement from autarky to trade, Bastos and Kreickemeier (2009) also analyze the implications of a marginal trade liberalization in an already open economy. In this respect, they show that the partial equilibrium wage effects of a small trade cost reduction, as analyzed in Naylor (1998Naylor ( , 1999, are reinforced if a full set of general equilibrium feedback effects is accounted for. The impact of a marginal trade liberalization is not addressed in this paper, since the assumption of industry-specific productivity levels renders such an analysis a non-trivial task, which is beyond the scope of this paper and thus left open for future research.…”

Section: Introductionmentioning

confidence: 97%

“…The common fear is that market integration improves the outside opportunities of firm owners and hence limits the possibility of workers to skim a fair share of the rents arising from economic activity (OECD, 2007). This issue has been prominently discussed in a large literature that addresses union wage setting in an international oligopoly (see, e.g., Mezzetti and Dinopoulos, 1991;Naylor, 1998;Lommerud, Meland, and Sørgard, 2003). However, the focus of this literature is on rent sharing at the firm or industry level, while there is no discussion on how trade affects the economy-wide distribution of profit and wage income, an issue that is of primary interest for policy makers who are concerned about the impact of trade on inequality and social justice (Bernanke, 2007;OECD, 2007).…”

Section: Introductionmentioning

confidence: 99%

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The impact of trade on employment, welfare, and income distribution in unionized general oligopolistic equilibrium

Egger

Etzel

2012

European Economic Review

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper sets up a general oligopolistic equilibrium model with unionized labor markets. By accounting for productivity differences, the model features profit and wage differentials across industries. We use this setting to study the impact of trade liberalization on employment, welfare, and the distribution of income. In particular, we show that a movement from autarky to free trade with a symmetric partner country lowers union wage claims and therefore stimulates employment and raises welfare. Whether firms can extract a larger share of rents in the open economy depends on the competitive environment as well as on the degree of centralization in union wage setting. Finally, the distribution of profit income across firm owners remains unaffected, while the distribution of wage income becomes more equal when a country opens up to trade. Terms of use: Documents inJEL-Code: F12, F16, J51, L13.

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Section: Introductionmentioning

confidence: 97%

Section: Introductionmentioning

confidence: 99%

The impact of trade on employment, welfare, and income distribution in unionized general oligopolistic equilibrium

Egger

Etzel

2012

European Economic Review

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“…Both Staiger (1988) and Naylor (1998Naylor ( ,1999) present models where unionized labor in fact might benefit from globalization. For example, Naylor presents a rather rosy picture: Unionized workers gain both in terms of higher wages and in terms of more jobs.…”

Section: Introductionmentioning

confidence: 99%

Can deunionization lead to international outsourcing?

Lommerud

Meland

Straume

2009

Journal of International Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We analyze unionized firms' incentives to outsource intermediate goods production to foreign (low-cost) subcontractors. Such outsourcing leads to increased wages for the remaining inhouse production. We find that stronger unions, which imply higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many countries. We further show that globalization -interpreted as either market integration or increased product market competition -will increase incentives for international outsourcing. Terms of use: Documents in EconStor mayJEL Code: F16, J51, L24.

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“…Markusen and Venables (1998) also generate two-way FDI without intermediates. The mechanisms at work in our model bear some similarity to the literature on FDI and unionization, such as Lommerud et al (2003), Straume (2003), Collie and Vandenbussche (2005), Naylor (1998Naylor ( , 1999, Bughin andVannini (1995), andZhao (1995). Unions have market power, similar to the suppliers of intermediates, and both might be expected to capture some profits from forces that benefit producers of final goods, such as increases in the price of final goods (Ries 1993).…”

Section: Contrast To Related Literaturementioning

confidence: 87%

Exporting versus Direct Investment under Local Sourcing

Glass

Saggi

2005

Rev. World Econ.

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This paper examines a setting where foreign direct investment (FDI) shifts demand for an intermediate good from the source to the host country. A domestic and a foreign firm choose between exports or FDI, always sourcing the intermediate locally. We show that by increasing the price of the intermediate, outward FDI can act as a cost-raising strategy for a firm and that attracting FDI can raise host country welfare. Two-way FDI is the equilibrium when the countries have similar market sizes. However, such FDI reduces global welfare relative to two-way exporting since it eliminates indirect competition between suppliers. JEL no. F12, F13, F23, L13

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International trade and economic integration when labour markets are generally unionised

Cited by 147 publications

References 12 publications

The impact of trade on employment, welfare, and income distribution in unionized general oligopolistic equilibrium

The impact of trade on employment, welfare, and income distribution in unionized general oligopolistic equilibrium

Can deunionization lead to international outsourcing?

Exporting versus Direct Investment under Local Sourcing

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