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Does globalization weaken labor unions in developing countries?

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  • Hamid Beladi
  • Chi-Chur Chao
  • Daniel Hollas

Abstract

For a developing economy with a given urban wage rate, globalization in capital markets strengthens labor unions. This result hinges on the fixed urban wage rate, which leads to a constant capital--labor ratio in the urban sector. Globalization via capital inflows not only enhances the employment effect of unionization but also reduces the rent-shifting related loss in production inefficiency to domestic capital, lending a support to labor unions for developing economies. This result is contrary to the common belief that labor unions tend to be weakened during the globalization process observed after 1980s in many developed economies.

Suggested Citation

  • Hamid Beladi & Chi-Chur Chao & Daniel Hollas, 2013. "Does globalization weaken labor unions in developing countries?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(4), pages 562-571, June.
    • Handle: RePEc:taf:jitecd:v:22:y:2013:i:4:p:562-571
    DOI: 10.1080/09638199.2011.578752
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