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Globalization and Union Opposition to Technological Change

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  • Lommerud, Kjell Erik
  • Meland, Frode
  • Straume, Odd Rune

Abstract

We find that trade unions have a rational incentive to oppose the adoption of labour-saving technology when labour demand is inelastic and unions care much for employment relative to wages. Trade liberalization typically increases trade union technology opposition. These conclusions are reached in a model of international duopoly with monopoly wage setting in one of the countries, and two-way trade. An important stepping-stone for the result is to note that even though trade liberalization means a tougher competitive environment for firms, labour demand tends to increase. We also find that the incentive for technology opposition is stronger in the more technologically advanced country and in the country with the larger home market, complementing earlier explanations for technological catch-up and leapfrogging.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4836.

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Date of creation: Jan 2005
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Handle: RePEc:cpr:ceprdp:4836

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Keywords: international unionized oligopoly; technology adaption; trade liberalization;

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