Labor-Management Bargaining, Labor Standards and International Rivalry
AbstractUsing the labor union's bargaining power as an indication of government policy on labor standards issues, we analyze the competition between a domestic (North) firm and a foreign (South) firm, and their relationship with optimal labor standards (LS). First, we show that the optimal level of LS is higher when labor unions are employment-oriented than when they are not. Second, it is higher under free trade than under the optimal tariff system if labor unions are employment-oriented. Third, 'a race to the bottom' of LS occurs in the case of wage-oriented unions. Fourth, the North's imposing a tariff to force the Southern government to raise its LS is effective only if the Southern union is wage-oriented. In order to raise Southern LS, both countries may need some deeper form of economic integration, if the North does not want to abandon its free trade system.
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Bibliographic InfoPaper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number 240.
Length: 29 pages
Date of creation: Apr 2009
Date of revision:
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Labor Standards; Race to the Bottom; Tariff; Economic Integration; Labor Union;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
- J80 - Labor and Demographic Economics - - Labor Standards - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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