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Unionisation, International Integration and Selection

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  • Catia Montagna
  • Antonella Nocco

Abstract

We study how unionisation affects competitive selection between heterogeneous firms when wage negotiations can occur at the firm or at the profit-centre level. With productivity specific wages, an increase in union power has: (i) a selection-softening; (ii) a counter-competitive; (iii) a wage-inequality; and (iv) a variety effect. In a two-country asymmetric setting, stronger unions soften competition for domestic firms and toughen it for exporters. With profit-centre bargaining, we show how trade liberalisation can affect wage inequality among identical workers both across firms (via its effects on competitive selection) and within firms (via wage discrimination across destination markets).

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 12/07.

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Handle: RePEc:not:notgep:12/07

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Keywords: Firm selection; unionisation; wage inequality; trade liberalisation.;

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  1. Eckel, Carsten & Egger, Hartmut, 2009. "Wage bargaining and multinational firms," Journal of International Economics, Elsevier, Elsevier, vol. 77(2), pages 206-214, April.
  2. Gianmarco Ottaviano & Thierry Mayer, . "The happy few: the internationalisation of European firms," Blueprints, Bruegel, Bruegel, number 12, December.
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Cited by:
  1. Felbermayr, Gabriel & Hauptmann, Andreas & Schmerer, Hans-Jörg, 2012. "International trade and collective bargaining outcomes : evidence from German employer-employee data," IAB Discussion Paper, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] 201207, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  2. Catia Montagna & Antonella Nocco, 2012. "Trade Costs, International Competition and Selection: The Effects of Unionisation on Market Size," Dundee Discussion Papers in Economics, Economic Studies, University of Dundee 269, Economic Studies, University of Dundee.

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