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The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada

Listed author(s):
  • John A. Abowd
  • Thomas Lemieux

In this paper we estimate the effect of the financial conditions of firms on negotiated wage settlements and on employment using a sample of Canadian collective bargaining agreements from 1965 to 1983. We find that ordinary least squares estimates of the effect of quasi-rents per worker on wages are positive but very small. However, we find a much larger effect when we instrument quasi-rents with measures of foreign competition shocks. We conclude that standard estimates of rent-sharing based on contract data seriously understate the impact of product market competition on negotiated wage settlements.

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File URL: http://hdl.handle.net/10.2307/2118457
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Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.

Volume (Year): 108 (1993)
Issue (Month): 4 ()
Pages: 983-1014

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Handle: RePEc:oup:qjecon:v:108:y:1993:i:4:p:983-1014.
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