Price and wage setting in an integrating Europe : firm level evidence
AbstractEurope has witnessed the last decade an accelerated process of economic integration. Trade barriers were removed, the euro was introduced and ten new member states entered the European Union. Economic integration is likely to have an impact on both labor and product markets. Unlike most other papers, that focus on product and labor markets separately, we look at the link between globalization and product and labor market imperfections simultaneously. To this end, we rely on a rich panel of manufacturing firms in Belgium, a small open economy. We find that union bargaining power is higher in sectors characterized by high price cost margins. Moreover, ignoring imperfections on the labor market, leads to an underestimation of product market power. Concerning the influence of globalization, our main findings are that both price cost margins and union bargaining power are typically lower in sectors that are subject higher international competition. This result is especially true for competition from low wage countries
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Bibliographic InfoPaper provided by National Bank of Belgium in its series Working Paper Research with number 93.
Length: 40 pages
Date of creation: Oct 2006
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Mark-ups; Trade Unions; International Trade;
Find related papers by JEL classification:
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-21 (All new papers)
- NEP-CBA-2006-10-21 (Central Banking)
- NEP-COM-2006-10-21 (Industrial Competition)
- NEP-EEC-2006-10-21 (European Economics)
- NEP-INT-2006-10-21 (International Trade)
- NEP-MIC-2006-10-21 (Microeconomics)
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- S. Dobbelaere & J. Mairesse, 2009.
"Panel data estimates of the production function and product and labor market imperfections,"
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium
09/586, Ghent University, Faculty of Economics and Business Administration.
- Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, 01.
- Dobbelaere, Sabien & Mairesse, Jacques, 2007. "Panel data estimates of the production function and product and labor market imperfections," Working Paper Series 0782, European Central Bank.
- Sabien Dobbelaere & Jacques Mairesse, 2009. "Panel Data Estimates of the Production Function and Product and Labor Market Imperfections," Tinbergen Institute Discussion Papers 09-001/3, Tinbergen Institute.
- Dobbelaere, Sabien & Mairesse, Jacques, 2010. "Panel Data Estimates of the Production Function and Product and Labor Market Imperfections," IZA Discussion Papers 5176, Institute for the Study of Labor (IZA).
- Sabien Dobbelaere & Jacques Mairesse, 2008. "Panel Data Estimates Of The Production Function And Product And Labor Market Imperfections," NBER Working Papers 13975, National Bureau of Economic Research, Inc.
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