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A Note on Free Trade Agreement and Wage Bargaining Structure

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Author Info
Yohanes E. Riyanto
Jung Hur

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Abstract

Mezzeti and Dinopoulos (1991) show that a free trade agreement (trade liberalization) decreases wage rate. However, Naylor (1998) shows that trade liberalization increases wage rate. Both papers consider tariff as exogenously given. In this paper we show that these conflicting results can be nested into a model of international duopoly with a more general wage bargaining structure. Tariff is endogenously determined in our model. In addition, we also derive crucial implications of the wage bargaining structure on the sustainability of trade liberalization

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Paper provided by Econometric Society in its series Econometric Society 2004 Far Eastern Meetings with number 637.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:feam04:637

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Related research
Keywords: wage bargaining structure; optimal tariff regime; free trade agreement;

Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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  1. Mezzetti, C. & Dinopoulos, E., 1989. "Domestic Unionization And Import Competition," Papers 337, California Davis - Institute of Governmental Affairs.
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  2. Naylor, Robin, 1998. "International trade and economic integration when labour markets are generally unionised," European Economic Review, Elsevier, vol. 42(7), pages 1251-1267, July. [Downloadable!] (restricted)
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This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.