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Foreign Direct Investment and the Unionization Rate

Author

Listed:
  • Hiroyuki Nishiyama
  • Masao Yamaguchi

Abstract

This paper examines the effect of foreign direct investment (FDI) on home wages by using a model assuming that two complementary intermediate goods are combined into a final product by an international/domestic division of labour. We find that FDI triggers higher (lower) home wages in the case that the ratio of non-unionized workers to unionized workers is sufficiently low (high). In addition, even if domestic and foreign production are complementary, the wages in the case of FDI can become lower than those in the case without FDI, in contrast to Skaksen and Sorensen (2001).

Suggested Citation

  • Hiroyuki Nishiyama & Masao Yamaguchi, 2010. "Foreign Direct Investment and the Unionization Rate," International Economic Journal, Taylor & Francis Journals, vol. 24(1), pages 45-52.
    • Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:45-52
    DOI: 10.1080/10168731003589725
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    References listed on IDEAS

    as
    1. Zhao, Laixun, 1995. "Cross-hauling direct foreign investment and unionized oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1237-1253, June.
    2. Skaksen, Mette Yde & Sorensen, Jan Rose, 2001. "Should trade unions appreciate foreign direct investment," Journal of International Economics, Elsevier, vol. 55(2), pages 379-390, December.
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