Product Market Integration and Wages in Unionized Countries
This paper addresses the effects of product market integration on wages. We develop a two-country general equilibrium model of international trade with imperfectly competitive product markets and unionized labor markets. Integration is modelled as either a fall in fixed or variable trade costs. A reduction in fixed trade costs leads to an unambiguous decrease in wages, whereas a reduction in variable trade costs has an ambiguous effect on wages. Copyright 2002 by The editors of the Scandinavian Journal of Economics.
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Volume (Year): 104 (2002)
Issue (Month): 2 (June)
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