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International trade and unionization: Evidence from India

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  • Reshad N. Ahsan
  • Arghya Ghosh
  • Devashish Mitra

Abstract

We exploit exogenous variation in tariffs to examine the impact of import competition on unionization and union wages in a developing country. Using a combination of nationally representative household data (National Sample Survey Organization) and nationally representative industry-level data (Annual Survey of Industries) from India, we find that net-import industries that experienced larger cuts in tariffs also experienced larger declines in unionization. In addition, we find that these industries also experienced larger increases in union wages. These results are consistent with the predictions of an efficient bargaining framework that we extend to endogenize the union formation decision by allowing for a fixed cost of union formation. We also conduct a back-of-the-envelope calculation to show that the total wage gains to unionized workers marginally exceed the total wage losses to deunionized workers.

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  • Reshad N. Ahsan & Arghya Ghosh & Devashish Mitra, 2017. "International trade and unionization: Evidence from India," Canadian Journal of Economics, Canadian Economics Association, vol. 50(2), pages 398-425, May.
    • Handle: RePEc:cje:issued:v:50:y:2017:i:2:p:398-425
    DOI: 10.1111/caje.12263
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    Cited by:

    1. Aditya Bhattacharjea, 2019. "Labour Market Flexibility in Indian Industry A Critical Survey of the Literature," Working papers 296, Centre for Development Economics, Delhi School of Economics.
    2. Devashish Mitra, 2019. "Responses to Trade Opening: Evidence and Lessons from Asia," Working Papers id:12977, eSocialSciences.
    3. Roy, Jayjit, 2021. "The effect of employment protection legislation on international trade," Economic Modelling, Elsevier, vol. 94(C), pages 221-234.
    4. Ernest Kay Bakpa & Hu Xuhua & Abigail Konadu Aboagye, 2021. "Ghana’s economic growth: Directing our focus on the contributing influences of innovation activities and trade," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2213-2237, December.
    5. Ahsan, Reshad N. & Chatterjee, Arpita, 2017. "Trade liberalization and intergenerational occupational mobility in urban India," Journal of International Economics, Elsevier, vol. 109(C), pages 138-152.

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    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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