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From the Invisible Handshake to the Invisible Hand? How Import Competition Changes the Employment Relationship

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Author Info
Marianne Bertrand (University of Chicago, Center for Economic Policy Research, and National Bureau of Economic Research)
Abstract

Does import competition alter the extent to which employers, after negotiating workers' wages upon hire, subsequently shield those wages from external labor-market conditions? If increased competition induces a switch away from these wage implicit agreements, then (1) the sensitivity of workers' wages to the current unemployment rate should increase as competition increases and (2) the sensitivity of workers' wages to the unemployment rate prevailing upon hire should decrease. Using exchange-rate movements to generate exogenous variation in import competition, I find evidence supporting both of these predictions. I show that increased financial pressures on employers is one mechanism driving these effects.

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File URL: http://www.journals.uchicago.edu/cgi-bin/resolve?JOLE220401
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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 22 (2004)
Issue (Month): 4 (October)
Pages: 723-766
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ucp:jlabec:v:22:y:2004:i:4:p:723-766

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  3. Gorodnichenko, Yuriy & Svejnar, Jan & Terrell, Katherine, 2009. "Globalization and Innovation in Emerging Markets," Policy Research Working Paper Series 4808, The World Bank. [Downloadable!]
  4. Bilgehan Karabay & John McLaren, 2009. "Trade, Offshoring, and the Invisible Handshake," NBER Working Papers 15048, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Stephanie Aaronson & Julia Coronado, 2005. "Are firms or workers behind the shift away from DB pension plan?," Finance and Economics Discussion Series 2005-17, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  6. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," IZA Discussion Papers 1665, Institute for the Study of Labor (IZA). [Downloadable!]
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  7. Uwe Jirjahn & Jens Mohrenweiser & Uschi Backes-Gellner, 2009. "Works Councils and Learning: On the Dynamic Dimension of Codetermination," Working Papers 0116, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
  8. Yuriy Gorodnichenko & Jan Svejnar & Katherine Terrell, 2008. "Globalization and innovation in emerging markets," NBER Working Papers 14481, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Maria Guadalupe & Francisco Perez-Gonzalez, 2006. "The Impact of Product Market Competition on Private Benefits of Control," Hi-Stat Discussion Paper Series d05-159, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  10. Yiping Zhu, 2008. "Globalisation, Employment, and Wage Rate: What Does Literature Tell Us?," IMK Working Paper 07-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  11. Luc Behaghel & Eve Caroli & Emmanuelle Walkowiak, 2007. "Innovation and skill upgrading: The role of external vs internal labour markets," PSE Working Papers 2007-04, PSE (Ecole normale supérieure). [Downloadable!]
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