Threat Effect of Foreign Direct Investment on Labor Union Wage Premium
AbstractThis paper explores the impact of “threat effects” of foreign direct investment on labor markets in the United States. In this context, the term “threat effect” refers to the use by employers of the implicit or explicit threat that they will move all or part of their production to a different location, even if they do not actually do so. In this paper, I construct a unique industry level panel data set and I show that the union wage premium has been negatively associated with the stock of outward FDI in the U.S. manufacturing sector for the period of 1983-1996. The union wage premium is chosen as the dependent variable to test the hypothesis that the increased capital mobility changes the nature of bargaining between workers and employers as predicted in threat effect theory.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp27.
Date of creation: 2001
Date of revision:
This paper has been announced in the following NEP Reports:
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.:
- Borjas, George J, 1987.
"Self-Selection and the Earnings of Immigrants,"
American Economic Review,
American Economic Association, vol. 77(4), pages 531-53, September.
- Richard J. Cebula & Usha Nair-Reichert, 2000. "Union Rent Seeking and Import Competition in U.S. Manufacturing," Journal of Labor Research, Transaction Publishers, vol. 21(3), pages 477-487, July.
- Allen, Steven G, 2001.
"Technology and the Wage Structure,"
Journal of Labor Economics,
University of Chicago Press, vol. 19(2), pages 440-83, April.
- Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
- Feenstra, Robert C & Hanson, Gordon H, 1996.
"Globalization, Outsourcing, and Wage Inequality,"
American Economic Review,
American Economic Association, vol. 86(2), pages 240-45, May.
- John M. Abowd & Thomas Lemieux, 1991.
"The Effects of International Competition on Collective Bargaining Outcomes: A Comparison of the United States and Canada,"
in: Immigration, Trade and the Labor Market, pages 343-367
National Bureau of Economic Research, Inc.
- John M. Abowd & Thomas Lemieux, 1990. "The Effects of International Competiton on Collective Bargaining Outcomes: A Comparison of the United States and Canada," NBER Working Papers 3352, National Bureau of Economic Research, Inc.
- Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2001.
"Expansion Strategies of U.S. Multinational Firms,"
0012, Bureau of Economic Analysis.
- Gaston, Noel & Trefler, Daniel, 1995. "Union wage sensitivity to trade and protection: Theory and evidence," Journal of International Economics, Elsevier, vol. 39(1-2), pages 1-25, August.
- David A. Macpherson & James B. Stewart, 1990. "The effect of international competition on union and nonunion wages," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(4), pages 434-446, April.
- André Sapir & Richard Baldwin & Daniel Cohen & Anthony Venables, 1999. "Market integration, regionalism and the global economy," ULB Institutional Repository 2013/8074, ULB -- Universite Libre de Bruxelles.
- Bughin, Jacques & Vannini, Stefano, 1995. "Strategic direct investment under unionized oligopoly," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 127-145, March.
- Zhao, Laixun, 1998. "The Impact of Foreign Direct Investment on Wages and Employment," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 284-301, April.
- Lawrence F. Katz & Lawrence H. Summers, 1989.
"Can Inter-Industry Wage Differentials Justify Strategic Trade Policy?,"
NBER Working Papers
2739, National Bureau of Economic Research, Inc.
- Lawrence F. Katz & Lawrence H. Summers, 1989. "Can Interindustry Wage Differentials Justify Strategic Trade Policy?," NBER Chapters, in: Trade Policies for International Competitiveness, pages 85-124 National Bureau of Economic Research, Inc.
- William T. Dickens & Lawrence F. Katz, 1987. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
- John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
- Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March.
- Zhao, Laixun, 1995. "Cross-hauling direct foreign investment and unionized oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1237-1253, June.
- Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
- Richard B. Freeman & Lawrence F. Katz, 1991. "Industrial Wage and Employment Determination in an Open Economy," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 235-259 National Bureau of Economic Research, Inc.
- M. Magnani, 2009. "Labor share dynamics: a survey of the theory," Economics Department Working Papers 2009-EP07, Department of Economics, Parma University (Italy).
- Anastasia Guscina, 2006. "Effects of Globalization on Labor's Share in National Income," IMF Working Papers 06/294, International Monetary Fund.
- Joseph A. Clougherty & Klaus Gugler & Lars Sørgard, 2012. " Cross-Border Mergers and Domestic Wages: Integrating Positive 'Spillover' Effects and Negative 'Bargaining' Effects," Department of Economics Working Papers wuwp136, Vienna University of Economics, Department of Economics.
- Stephanie Seguino, 2005.
"Is More Mobility Good? Firm Mobility and the Low Wage-Low Productivity Trap,"
- Seguino, Stephanie, 2007. "Is more mobility good?: Firm mobility and the low wage-low productivity trap," Structural Change and Economic Dynamics, Elsevier, vol. 18(1), pages 27-51, March.
- Stephanie Seguino, 2005. "Is More Mobility Good? Firm Mobility and the Low Wage -- Low Productivity Trap," Economics Working Paper Archive wp_423, Levy Economics Institute, The.
- William Milberg & Deborah Winkler, 2009. "Globalization, Offshoring and Economic Insecurity in Industrialized Countries," Working Papers 87, United Nations, Department of Economics and Social Affairs.
- Brännlund, Runar & Nordström, Jonas & Svedin, Dick, 2004. "Foreign ownership and effects on employment and wages: The case of Sweden," UmeÃ¥ Economic Studies 638, Umeå University, Department of Economics, revised 01 Nov 2004.
- Luciano BOGGIO & Vincenzo DALL’AGLIO & Marco MAGNANI, 2010.
"On Labour Shares in Recent Decades: A Survey,"
Rivista Internazionale di Scienze Sociali,
Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 118(3), pages 283-333.
- Luciano Boggio & Vincenzo Dall'Aglio & Marco Magnani, 2009. "On Labour Shares in Recent Decades: A Survey," DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi itemq0957, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
- Stephanie Seguino, 2005.
"Gender Inequality in a Globalizing World,"
Economics Working Paper Archive
wp_426, Levy Economics Institute, The.
- Sebastian Braun, 2009. "Should trade unions welcome foreign investors? First evidence from Danish matched employer-employee data," Economics Bulletin, AccessEcon, vol. 29(2), pages 1175-1181.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Judy Fogg).
If references are entirely missing, you can add them using this form.