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Unionized Labor Markets and Globalized Capital Markets

Author

Listed:
  • Marta Aloi
  • Manuel Leite-Monteiro
  • Teresa Lloyd-Braga

Abstract

This paper studies the effects of international integration of capital markets in a world where countries differ in their labor market institutions: one country has a perfectly competitive labor market while the other is unionized. We show that workers should favor autarky in the unionized country, but oppose it in the non unionized country and vice versa for owners of capital. Aggregate gains from integration, however, are negative. We also show that, under capital mobility, an increase in relative bargaining power of unions does not always improve workers’ welfare.

Suggested Citation

  • Marta Aloi & Manuel Leite-Monteiro & Teresa Lloyd-Braga, "undated". "Unionized Labor Markets and Globalized Capital Markets," Discussion Papers 08/10, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  • Handle: RePEc:not:notcfc:08/10
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    File URL: http://www.nottingham.ac.uk/cfcm/documents/papers/08-10.pdf
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    References listed on IDEAS

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    1. Cremer, Helmuth & et al, 1996. "Mobility and Redistribution: A Survey," Public Finance = Finances publiques, , vol. 51(3), pages 325-352.
    2. Joseph E. Stiglitz, 2004. "Capital-market Liberalization, Globalization, and the IMF," Oxford Review of Economic Policy, Oxford University Press, vol. 20(1), pages 57-71, Spring.
    3. Robin Naylor & Michele Santoni, 2003. "Foreign direct investment and wage bargaining," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(1), pages 1-18.
    4. Zhao, Laixun, 2001. "Unionization, vertical markets, and the outsourcing of multinationals," Journal of International Economics, Elsevier, vol. 55(1), pages 187-202, October.
    5. Skaksen, Mette Yde & Sorensen, Jan Rose, 2001. "Should trade unions appreciate foreign direct investment," Journal of International Economics, Elsevier, vol. 55(2), pages 379-390, December.
    6. Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57.
    7. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
    8. Eaton, Jonathan & Panagariya, Arvind, 1979. "Gains from trade under variable returns to scale, commodity taxation, tariffs and factor market distortions," Journal of International Economics, Elsevier, vol. 9(4), pages 481-501, November.
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    Citations

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    Cited by:

    1. Donado, Alejandro & Wälde, Klaus, 2010. "How bad is globalization for labour standards in the north?," W.E.P. - Würzburg Economic Papers 84, University of Würzburg, Chair for Monetary Policy and International Economics.
    2. Pica Giovanni, 2010. "Capital Markets Integration and Labor Market Institutions," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-57, March.
    3. Rüdiger Pethig & Frieder Kolleß, 2009. "Asymmetric Capital-Tax Competition, Unemployment and Losses from Capital Market Integration," CESifo Working Paper Series 2795, CESifo Group Munich.
    4. Sara Amoroso & Mafini Dosso & Pietro Moncada-Paterno-Castello, 2015. "The impact of skill endowments and collective bargaining on knowledge-intensive greenfield FDI," JRC Working Papers on Corporate R&D and Innovation 2015-08, Joint Research Centre (Seville site).
    5. Palokangas, Tapio K., 2017. "Labor Market Regulation, International Trade and Footloose Capital," IZA Discussion Papers 10468, Institute for the Study of Labor (IZA).
    6. Donado, Alejandro. & Wälde, Klaus., 2012. "Globalization, trade unions and labour standards in the North," ILO Working Papers 994694483402676, International Labour Organization.
    7. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.
    8. Hamid Beladi & Chi-Chur Chao & Daniel Hollas, 2013. "Does globalization weaken labor unions in developing countries?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(4), pages 562-571, June.
    9. repec:ilo:ilowps:469448 is not listed on IDEAS
    10. Thomas Aronsson & Erkki Koskela, 2009. "Optimal Income Taxation, Outsourcing and Policy Cooperation in a Dynamic Economy," CESifo Working Paper Series 2776, CESifo Group Munich.

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    Keywords

    Capital mobility; Globalization; Unions; Welfare.;

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