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Hit by the Silk Road: How Wage Coordination in Europe Mitigates the China Shock

Author

Listed:
  • Barth, Erling

    (Institute for Social Research, Oslo)

  • Finseraas, Henning

    (Norwegian University of Science and Technology (NTNU))

  • Kjelsrud, Anders

    (University of Oslo)

  • Moene, Karl Ove

    (University of Oslo)

Abstract

Coordination in collective wage setting can constrain potential monopoly gains to unions in non-traded-goods industries. Countries with national wage coordination can thus stabilize overall employment against fluctuations and shocks in the world economy. We test this theory by exploring within-country variation in exposure to competition from China in 13 European countries. Our causal estimates demonstrate that in countries with uncoordinated wage setting, regions with higher import exposure from China experienced a marked fall in employment, while countries with wage-coordination experienced no such employment effects. We test our main mechanism against other explanations, and show that our findings are robust to alternative measures of wage coordination, industry classifications, and trade exposure.

Suggested Citation

  • Barth, Erling & Finseraas, Henning & Kjelsrud, Anders & Moene, Karl Ove, 2020. "Hit by the Silk Road: How Wage Coordination in Europe Mitigates the China Shock," IZA Discussion Papers 13259, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp13259
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    References listed on IDEAS

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    More about this item

    Keywords

    wage-coordination; employment; globalization; China-shock;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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