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Labor-Management Bargaining, Labor Standards and International Rivalry

Author

Listed:
  • Jung Hur

    (College of Economics, Sogan University, Korea)

  • Laixun Zhao

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

Using the labor union's bargaining power as an indication of government policy on labor standards issues, we analyze the competition between a domestic (North) firm and a foreign (South) firm, and their relationship with optimal labor standards (LS). First, we show that the optimal level of LS is higher when labor unions are employment-oriented than when they are not. Second, it is higher under free trade than under the optimal tariff system if labor unions are employment-oriented. Third, 'a race to the bottom' of LS occurs in the case of wage-oriented unions. Fourth, the North's imposing a tariff to force the Southern government to raise its LS is effective only if the Southern union is wage-oriented. In order to raise Southern LS, both countries may need some deeper form of economic integration, if the North does not want to abandon its free trade system.

Suggested Citation

  • Jung Hur & Laixun Zhao, 2009. "Labor-Management Bargaining, Labor Standards and International Rivalry," Discussion Paper Series 240, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:240
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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp240.pdf
    File Function: First version, 2009
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    More about this item

    Keywords

    Labor Standards; Race to the Bottom; Tariff; Economic Integration; Labor Union;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J80 - Labor and Demographic Economics - - Labor Standards - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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