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International Competition and the Unionized Sector

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Author Info
Gene M. Grossman

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Abstract

This paper studies the wage and employment behavior of a unionized sector that is confronted by an intensification of international competition. After developing a formal model of a monopoly union subject to majority rule, I study the response of a unionized sector operating under a seniority rule for layoffs and rehires to a trend decrease in the international price of its output. Conditions are provided to validate the casual argument that majority voting in unions and the seniority system together provide an explanation for the lack of union wage adjustment. A modified version of the model allows the job queue to deviate from a strict seniority ranking. In this context I ask, what importance can be attached to the seniority system in determining the wage response to international competition?

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0899.

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Date of creation: Mar 1985
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Publication status: published as Grossman, Gene M. "International Competition and the Unionized Sector." Canadian Journal of Economics, Vol. 17, No. 3, (August 1984), pp. 541-556.
Handle: RePEc:nbr:nberwo:0899

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hall, Robert E & Lilien, David M, 1979. "Efficient Wage Bargains under Uncertain Supply and Demand," American Economic Review, American Economic Association, vol. 69(5), pages 868-79, December. [Downloadable!] (restricted)
  2. Corden, W M & Findlay, Ronald, 1975. "Urban Unemployment, Intersectoral Capital Mobility and Development Policy," Economica, London School of Economics and Political Science, vol. 42(165), pages 59-78, February. [Downloadable!] (restricted)
  3. Srinivasan, T. N. & Bhagwati, Jagdish, 1975. "Alternative policy rankings in a large, open economy with sector-specific, minimum wages," Journal of Economic Theory, Elsevier, vol. 11(3), pages 356-371, December. [Downloadable!] (restricted)
  4. Calvo, Guillermo A, 1978. "Urban Employment and Wage Determination in LDC's: Trade Unions in the Harris-Todaro Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(1), pages 65-81, February. [Downloadable!] (restricted)
  5. Farrell Bloch & Mark S. Kuskin, 1978. "Wage determination in the union and nonunion sectors," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 31(2), pages 183-192, January.
  6. Bhagwati, Jagdish N & Srinivasan, T N, 1974. "On Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wages," American Economic Review, American Economic Association, vol. 64(3), pages 502-08, June. [Downloadable!] (restricted)
  7. Sanford J. Grossman & Oliver D. Hart, 1983. "Implicit Contracts Under Asymmetric Information," NBER Reprints 0430, National Bureau of Economic Research, Inc.
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  8. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December. [Downloadable!] (restricted)
  9. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December. [Downloadable!] (restricted)
  10. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Robert C. Feenstra, 1995. "Estimating the Effects of Trade Policy," NBER Working Papers 5051, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Jorge Saba Arbache, 1999. "Trade Liberalisation and Insider Power: The Case of Brazil," Studies in Economics 9902, Department of Economics, University of Kent. [Downloadable!]
  3. Rana Hasan & Lan Chen, 2003. "Trade and Workers: Evidence from the Philippines," Economics Study Area Working Papers 61, East-West Center, Economics Study Area. [Downloadable!]
  4. Prachi Mishra & Utsav Kumar, 2005. "Trade Liberalization and Wage Inequality: Evidence from India," IMF Working Papers 05/20, International Monetary Fund. [Downloadable!]
  5. Pinelopi K. Goldberg & Nina Pavcnik, 2001. "Trade Protection and Wages: Evidence from the Colombian Trade Reforms," NBER Working Papers 8575, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Jeffrey Sachs, 1986. "High Unemployment in Europe: Diagnosis and Policy Implications," NBER Working Papers 1830, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Attanasio, Orazio & Goldberg, Pinelopi & Pavcnik, Nina, 2003. "Trade Reforms and Wage Inequality in Colombia," CEPR Discussion Papers 4023, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  8. Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2003. "Trade, Wages and the Political Economy of Trade Protection: Evidence from the Colombian Trade Reforms," CEPR Discussion Papers 3877, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  9. Joseph Francois & Kevin Grier & Douglas Nelson, 2004. "Globalization, Roundaboutness, and Relative Wages," Tinbergen Institute Discussion Papers 04-021/2, Tinbergen Institute. [Downloadable!]
    Other versions:
  10. James A. Brander & Barbara J. Spencer, 1986. "International Oligopoly and Asymmetric Labour Market Institutions," NBER Working Papers 2038, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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