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Unions, Competition, and International Trade in General Equilibrium

In: International Trade and Labor Markets Welfare, Inequality and Unemployment

Author

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  • Paulo Bastos
  • Udo Kreickemeier

Abstract

We develop a two-country, multi-sector model of oligopoly in which unionized and non-unionized sectors interact in general equilibrium. The model is used to study the impact of trade liberalization, deunionization and firm entry on wages in unionized and nonunionized sectors, and on welfare. We find that a shift from autarky to free trade increases non-union wages and welfare, whereas the effect on union wages is ambiguous. We also show that partial deunionization leads to higher wages in both unionized and non-unionized sectors, but only increases welfare when the proportion of unionized sectors is sufficiently low. Finally, wages in non-unionized sectors necessarily increase with firm entry, while the response of union wages and welfare depends on the trade regime.

Suggested Citation

  • Paulo Bastos & Udo Kreickemeier, 2017. "Unions, Competition, and International Trade in General Equilibrium," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 6, pages 143-172 World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789813224919_0006
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    References listed on IDEAS

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    More about this item

    Keywords

    International Trade; Inequality; Labor Markets; Unemployment; Offshoring;

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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