Die Struktur kollektiver Lohnverhandlungen und ausfließende Direktinvestitionen in der OECD / The Structure of Collective Bargaining and Foreign Investment Outflows in the OECD

A regulated labor market and a centralized system of collective bargaining are often blamed for a low level of inflowing and a high level of outflowing foreign direct investments. It is argued that central wage agreements are too inflexible to react to firm specific aspects and hence foster the relocation of production abroad. However, there is evidence that it is the productive and efficient firms that locate abroad. More productive firms tend to gain from centralized bargaining as they are faced by reduced rent seeking activities of trade unions. Thus productive firms tend to benefit rather than lose from centralized bargaining and firms relocate less often than with decentralized bargaining. This paper analyzes the influence of the structure of collective bargaining on foreign direct investment abroad, using a panel of 19 OECD countries in 1980, 1990, and 1994. The results of the empirical model suggest that centralization or coordination of collective bargaining and foreign direct investment outflows are inversely related. This rejects the hypothesis that bargaining on the firm level might reduce investment abroad. Other variables that characterize the degree of unionization or the distortion of labor markets like union density, bargaining coverage, or labor costs have no significant impact on foreign direct investment.