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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

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  • John M. Abowd
  • Thomas Lemieux

Abstract

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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Suggested Citation

  • John M. Abowd & Thomas Lemieux, 1991. "The Effects of International Competition on Collective Bargaining Outcomes: A Comparison of the United States and Canada," NBER Chapters,in: Immigration, Trade, and the Labor Market, pages 343-367 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:11780
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    References listed on IDEAS

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    1. 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.
    2. Wayne Vroman, 1982. "Union Contracts and Money Wage Changes in U. S. Manufacturing Industries," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 571-594.
    3. David Card, 1988. "Strikes and Wages: A Test of a Signalling Model," NBER Working Papers 2550, National Bureau of Economic Research, Inc.
    4. 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.
    5. 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.
    6. Grossman, Gene M, 1982. "Import Competition from Developed and Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 271-281, May.
    7. 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 165-178, May.
    8. Grossman, Gene M., 1986. "Imports as a cause of injury: The case of the U.S. steel industry," Journal of International Economics, Elsevier, vol. 20(3-4), pages 201-223, May.
    9. 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.
    10. John M. Abowd, 1990. "The NBER Immigration, Trade, and Labor Markets Data Files," NBER Working Papers 3351, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Grossman, Gene M & Levinsohn, James A, 1989. "Import Competition and the Stock Market Return to Capital," American Economic Review, American Economic Association, vol. 79(5), pages 1065-1087, December.
    2. Ilham Haouas & Mahmoud Yagoubi & Almas Heshmati, 2005. "The impacts of trade liberalization on employment and wages in Tunisian industries," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(4), pages 527-551.
    3. Menon, Nidhiya & Rodgers, Yana van der Meulen, 2009. "International Trade and the Gender Wage Gap: New Evidence from India's Manufacturing Sector," World Development, Elsevier, vol. 37(5), pages 965-981, May.
    4. Budd, John W., 2000. "The effect of strike replacement legislation on employment," Labour Economics, Elsevier, vol. 7(2), pages 225-247, March.
    5. David Greenaway & Robert Hine & Peter Wright, 2000. "Further evidence on the effect of foreign competition on industry level wages," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(3), pages 522-538, September.
    6. Jaime Saavedra-Chanduví & Máximo Torero, 2002. "Union Density Changes and Union Effects on Firm Performance in Peru," IDB Publications (Working Papers) 3282, Inter-American Development Bank.
    7. Ilham Haouas & Mahmoud Yagoubi, 2001. "Consequences of trade liberalization on the labor market in developing economy : The case of Tunisia," Documents de travail 64, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    8. Persyn, Damiaan, 2008. "Trade as a Wage Disciplining Device," IZA Discussion Papers 3786, Institute for the Study of Labor (IZA).
    9. Henry S. Farber, 1987. "The Decline of Unionization in the United States: What can Be Learned from Recent Experience?," NBER Working Papers 2267, National Bureau of Economic Research, Inc.
    10. Minsik Choi, 2001. "Threat Effect of Foreign Direct Investment on Labor Union Wage Premium," Working Papers wp27, Political Economy Research Institute, University of Massachusetts at Amherst.
    11. Francois, Joseph & Nelson, Doug R, 2000. "Victims of Progress: Economic Integration, Specialization and Wages for Unskilled Labour," CEPR Discussion Papers 2527, C.E.P.R. Discussion Papers.
    12. George J. Borjas & Valerie A. Ramey, 1993. "Foreign Competition, Market Power and Wage Inequality: Theory and Evidence," NBER Working Papers 4556, National Bureau of Economic Research, Inc.
    13. John W. Budd & Matthew J.Slaughter, 2000. "Are Profits Shared Across Borders? Evidence on International Rent Sharing," NBER Working Papers 8014, National Bureau of Economic Research, Inc.

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