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Unionized Wage Setting and the Location of Firms

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Author Info
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/DP/DP2009/Vivesdiscussionpaper9.pdf
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Publisher Info
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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Related research
Keywords: location; unions; regionalization; centralization;

Find related papers by JEL classification:
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R3 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies

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This page was last updated on 2009-12-1.

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