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The Effects of International Competition on Collective Bargaining Outcomes: A Comparison of the United States and Canada

In: Immigration, Trade, and the Labor Market

  • John M. Abowd
  • Thomas Lemieux

We study the effects of import and export competition on collectively bargained wage settlements and bargaining unit employment from the sixties to the mid-eighties for the United States and Canada. Both value-based and pricebased measures of international competition are considered. We distinguish between the expected effects of increased international trade on new collective bargaining agreements and the realized effects over the life of existing agreements. Using value-based trade measures, the estimated effect of an increase in import domestic market share, holding constant the rate of growth of the domestic market, is negative for employment in both countries and exceeds the effect of a comparable change in the size of the domestic market. The import effect on wage rates is also negative for the United States but not for Canada. The import wage effect in the U.S. is also larger than the effect of a comparable change in the domestic market size. The estimated effect of increased export growth is positive for employment in both countries. The export effect on employment is comparable in magnitude to the effect of a change in the size of the domestic market. The export effect on wage rates is mixed-weakly positive for the U.S. and ambiguous for Canada. For Canada, we also estimate world price effects. Increases in the world import price index for the industry are associated with increased union employment. Increases in the world import price index for the industry are associated with increased union employment and lower wage settlements.

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This chapter was published in:
  • John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, October.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 11780.
    Handle: RePEc:nbr:nberch:11780
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Web page: http://www.nber.org
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    1. Christofides, Louis N & Swidinsky, Robert & Wilton, David A, 1980. "A Microeconometric Analysis of the Canadian Wage Determination Process," Economica, London School of Economics and Political Science, vol. 47(186), pages 165-78, May.
    2. Abowd, John M, 1989. "The Effect of Wage Bargains on the Stock Market Value of the Firm," American Economic Review, American Economic Association, vol. 79(4), pages 774-800, September.
    3. Wayne Vroman & John M. Abowd, 1988. "Disaggregated Wage Developments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 313-346.
    4. Gene M. Grossman, 1982. "The Employment and Wage Effects of Import Competition in the United States," NBER Working Papers 1041, National Bureau of Economic Research, Inc.
    5. Gene M. Grossman, 1984. "Imports as a Cause of Injury: The Case of the U.S. Steel Industry," NBER Working Papers 1494, National Bureau of Economic Research, Inc.
    6. Vroman, Wayne, 1982. "Union Contracts and Money Wage Changes in U.S. Manufacturing Industries," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 571-94, November.
    7. David Card, 1988. "Strikes and Wages: A Test of a Signalling Model," NBER Working Papers 2550, National Bureau of Economic Research, Inc.
    8. Grossman, Gene M, 1982. "Import Competition from Developed and Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 271-81, May.
    9. John M. Abowd, 1990. "The NBER Immigration, Trade, and Labor Markets Data Files," NBER Working Papers 3351, National Bureau of Economic Research, Inc.
    10. Riddell, William Craig, 1979. "The Empirical Foundations of the Phillips Curve: Evidence from Canadian Wage Contract Data," Econometrica, Econometric Society, vol. 47(1), pages 1-24, January.
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