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Unionized Wage Setting and the Location of Firms

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  • Karolien De Bruyne

Abstract

We analyze how unionized wage setting a¤ects the location of firms. We find that the degree of centralization (at firm or sectoral level) and regionalization (at regional or supra-regional level) is crucial. We show that wage setting at the firm level is the best policy to attract firms when trade costs are low, while wage setting at a more centralized level is most effective to attract firms when trade costs are high. Moreover, wage setting at the supra-regional level is beneficial for the already more agglomerated region and hurts the peripheral region.

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File URL: http://www.econ.kuleuven.be/VIVES/publicaties/discussionpapers/DP/DP2009/vivesdiscussionpaper9.pdf
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Paper provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives in its series Vives discussion paper series with number 9.

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Date of creation: 2009
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Handle: RePEc:ete:vivwps:9

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Keywords: location; unions; regionalization; centralization;

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