Wage bargaining and multinational firms

Eckel, Carsten; Egger, Hartmut

doi:10.1016/j.jinteco.2009.01.004

Cited by 75 publications

(92 citation statements)

References 27 publications

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“…For instance, Braun and Scheffel (2007) report that the President of the employer association for the German metal and electrical industry -Gesamtmetall -indirectly threatened that production would be moved abroad if the unions did not agree to moderate wage increases. In a similar vein, Eckel and Egger (2009) report two different instances where the presence of foreign production helped a firm weather a strike. First, Goodyear Tire and Rubber Co. announced during a major steelworkers strike in North America that it could fall back on the production of foreign subsidiaries to soften the strike's impact.…”

Section: Conclusion and Discussionmentioning

confidence: 92%

Cross-border mergers and domestic-firm wages: Integrating “spillover effects” and “bargaining effects”

et al. 2014

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Cross-border mergers and domestic-firm wages: Integrating "spillover effects" and "bargaining effects" Article (Draft) Original Citation: Clougherty, Joseph A. and Gugler, Klaus and Sørgard, Lars and Szücs, Florian (2014) Cross-border mergers and domestic-firm wages: Integrating "spillover effects" and "bargaining effects". Journal of International Business Studies, 45. pp. 450-470. ISSN 0047-2506 This version is available at: http://epub.wu.ac.at/4129/ Available in ePub WU : April 2014 ePub WU , the institutional repository of the WU Vienna University of Economics and Business, is provided by the University Library and the IT-Services. The aim is to enable open access to the scholarly output of the WU.This document is an early version circulated as work in progress. There are minor differences between this and the publisher version which could however affect a citation.http://epub.wu.ac.at/ 1 Cross-border mergers and domestic-firm wages:Integrating 'spillover effects' and 'bargaining effects' Abstract Two literatures exist concerning cross-border merger activity's impact on domestic wages: one focusing on positive spillover-effects; the other focusing on negative bargaining-effects. Motivated by scarce theoretical scholarship spanning these literatures, we nest both mechanisms in a single conceptual framework. Considering the separate phenomena of inward and outward cross-border merger activity, our theoretical model generates three formal propositions: cross-border mergers can lead to wage increases via positive spillover-effects; and negative bargaining-effects are relatively more dominant when union market power is high, and when merging firms exhibit relatedness. Employing US firm-level panel data on wages combined with industry-level data on unionization and merger activity (covering 1989-2001), we find support for our propositions as inward and outward cross-border merger activity generate positive spillovers to wages, but are more likely to generate firm-level wage decreases when unionization rates are high and when cross-border merger activity is characterized as horizontal. Accordingly, future research on how cross-border mergers affect domestic wages should be mindful that both spillover and bargaining effects are at play, and that the degree of union marketpower and the relatedness of cross-border merger activity are critical in determining which effect dominates.

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Section: Conclusion and Discussionmentioning

confidence: 92%

Cross-border mergers and domestic-firm wages: Integrating “spillover effects” and “bargaining effects”

et al. 2014

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“…The Nash bargaining problem for …rms producing only for the domestic market is given by (13) which is solved subject to the pro…t D (c) in (36) and the union's total labour rent in (14) to yield:…”

Section: Unionsmentioning

confidence: 99%

“…Felbermayr, Prat and Schmerer [15], in a model with search frictions with individual or collective e¢ cient wage bargaining, …nd that …rms with di¤erent productivities pay similar wages regardless of the bargaining environment. Unionization is considered, within a di¤erent context from ours that focuses on multinational production, by Eckel and Egger [13] who …nd wages to be the same for all …rms, with a wage premium paid by exporters. Furthermore, with the exception of Helpman and Itskhoki [18] and Helpman et al [19] who allow for inter-country asymmetries in the degree of labour market frictions, all the above mentioned works di¤er from our model in that they assume fully symmetric countries.…”

Section: Introductionmentioning

confidence: 99%

Unionization, international integration, and selection

Montagna

Nocco

2013

Canadian J of Economics

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We study how unionisation a¤ects competitive selection between heterogeneous …rms when wage negotiations can occur at the …rm or at the pro…t-centre level. With productivity speci…c wages, an increase in union power has: (i) a selection-softening; (ii) a counter-competitive; (iii) a wage-inequality; and (iv) a variety e¤ect. In a two-country asymmetric setting, stronger unions soften competition for domestic …rms and toughen it for exporters. With pro…t-centre bargaining, we show how trade liberalisation can a¤ect wage inequality among identical workers both across …rms (via its e¤ects on competitive selection) and within …rms (via wage discrimination across destination markets).

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“…However, most of the existing studies on union wage-setting in an international trade context do not tackle this issue. For an exception, see Eckel and Egger (2009).…”

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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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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Wage bargaining and multinational firms

Cited by 75 publications

References 27 publications

Cross-border mergers and domestic-firm wages: Integrating “spillover effects” and “bargaining effects”

Cross-border mergers and domestic-firm wages: Integrating “spillover effects” and “bargaining effects”

Unionization, international integration, and selection

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

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