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Unionized Wage Setting and the Location of Firms


  • Karolien De Bruyne


We analyze how unionized wage setting a¤ects the location of firms. We find that the degree of centralization (at firm or sectoral level) and regionalization (at regional or supra-regional level) is crucial. We show that wage setting at the firm level is the best policy to attract firms when trade costs are low, while wage setting at a more centralized level is most effective to attract firms when trade costs are high. Moreover, wage setting at the supra-regional level is beneficial for the already more agglomerated region and hurts the peripheral region.

Suggested Citation

  • Karolien De Bruyne, 2009. "Unionized Wage Setting and the Location of Firms," Working Papers VIVES Research Centre for Regional Economics 9, KU Leuven, Faculty of Economics and Business, VIVES Research Centre for Regional Economics.
  • Handle: RePEc:ete:vivwps:9

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    More about this item


    location; unions; regionalization; centralization;

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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