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(De)Unionization, Trade Liberalization and Selection

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  • Catia Montagna
  • Antonella Nocco

Abstract

The effects of union bargaining power and trade liberalization on industry selection are analysed within a two-country heterogeneous-firm model with firm-specific unions and inter-country asymmetries in size and union power. Union bargaining power is shown to have more nuanced effects on efficiency and welfare than what typically suggested by conventional wisdom. While the higher wages resulting from an unfavourable union power differential harm firms' competitiveness, by reinforcing standard market access mechanisms, they give rise to aggregate demand effects that can act as a catalyst for industry and result in a pro-variety effect.

Suggested Citation

  • Catia Montagna & Antonella Nocco, 2015. "(De)Unionization, Trade Liberalization and Selection," Metroeconomica, Wiley Blackwell, vol. 66(1), pages 91-122, February.
  • Handle: RePEc:bla:metroe:v:66:y:2015:i:1:p:91-122
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    File URL: http://hdl.handle.net/10.1111/meca.12064
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    References listed on IDEAS

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    Cited by:

    1. de Pinto, Marco & Lingens, Jörg, 2019. "The impact of unionization costs when firm-selection matters," Labour Economics, Elsevier, vol. 60(C), pages 50-63.
    2. Gilbert L. Skillman, 2020. "The Nash Bargaining Solution in Labor Market Analysis," Wesleyan Economics Working Papers 2020-005, Wesleyan University, Department of Economics.
    3. Görg, Holger & Henze, Philipp & Jienwatcharamongkhol, Viroj & Kopasker, Daniel & Molana, Hassan & Montagna, Catia & Sjöholm, Fredrik, 2017. "Firm size distribution and employment fluctuations: Theory and evidence," Research in Economics, Elsevier, vol. 71(4), pages 690-703.
    4. de Pinto, Marco & Michaelis, Jochen, 2019. "The labor market effects of trade union heterogeneity," Economic Modelling, Elsevier, vol. 78(C), pages 60-72.

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