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International trade and unionization: Evidence from India

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  • Reshad N. Ahsan
  • Arghya Ghosh
  • Devashish Mitra

Abstract

We exploit exogenous variation in tariffs to examine the impact of import competition on unionization and union wages in a developing country. Using a combination of nationally representative household data (National Sample Survey Organization) and nationally representative industry‐level data (Annual Survey of Industries) from India, we find that net‐import industries that experienced larger cuts in tariffs also experienced larger declines in unionization. In addition, we find that these industries also experienced larger increases in union wages. These results are consistent with the predictions of an efficient bargaining framework that we extend to endogenize the union formation decision by allowing for a fixed cost of union formation. We also conduct a back‐of‐the‐envelope calculation to show that the total wage gains to unionized workers marginally exceed the total wage losses to deunionized workers. Commerce international et syndicalisation : résultats pour l'Inde. On profite de la variation exogène dans les tarifs douaniers pour examiner l'impact de la concurrence par les importations sur la syndicalisation et les salaires des syndiqués. À l'aide d'une combinaison de données représentatives au plan national pour les ménages (National Sample Survey Organization) et de données représentatives au plan national pour les industries (Annual Survey of Industries) pour l'Inde, on découvre que les industries qui sont les importatrices nettes bénéficiant des réductions plus importantes dans les tarifs sont aussi celles qui font l'expérience de déclins plus importants dans la syndicalisation. De plus, ces industries font aussi l'expérience d'accroissements de salaires plus importants pou les syndiqués. Ces résultats s'arriment bien aux prédictions émergeant du cadre conceptuel du marchandage efficient que les auteurs introduisent pour endogénéiser la décision de former un syndicat – en postulant un coût fixe pour la formation d'un syndicat. On fait aussi certains calculs préliminaires pour montrer que les gains salariaux totaux des travailleurs syndiqués tendent à excéder marginalement les pertes totales des employés non‐syndiqués.

Suggested Citation

  • Reshad N. Ahsan & Arghya Ghosh & Devashish Mitra, 2017. "International trade and unionization: Evidence from India," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(2), pages 398-425, May.
    • Handle: RePEc:wly:canjec:v:50:y:2017:i:2:p:398-425
    DOI: 10.1111/caje.12263
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    Cited by:

    1. Aditya Bhattacharjea, 2019. "Labour Market Flexibility in Indian Industry A Critical Survey of the Literature," Working papers 296, Centre for Development Economics, Delhi School of Economics.
    2. Devashish Mitra, 2019. "Responses to Trade Opening: Evidence and Lessons from Asia," Working Papers id:12977, eSocialSciences.
    3. Roy, Jayjit, 2021. "The effect of employment protection legislation on international trade," Economic Modelling, Elsevier, vol. 94(C), pages 221-234.
    4. Ernest Kay Bakpa & Hu Xuhua & Abigail Konadu Aboagye, 2021. "Ghana’s economic growth: Directing our focus on the contributing influences of innovation activities and trade," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2213-2237, December.
    5. Ahsan, Reshad N. & Chatterjee, Arpita, 2017. "Trade liberalization and intergenerational occupational mobility in urban India," Journal of International Economics, Elsevier, vol. 109(C), pages 138-152.

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    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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