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Hit by the Silk Road: how wage coordination in Europe mitigates the China shock

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  • Erling Barth
  • Henning Finseraas
  • Anders Kjelsrud
  • Kalle Moene

Abstract

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

Suggested Citation

  • Erling Barth & Henning Finseraas & Anders Kjelsrud & Kalle Moene, 2023. "Hit by the Silk Road: how wage coordination in Europe mitigates the China shock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 32-72, January.
    • Handle: RePEc:bla:scandj:v:125:y:2023:i:1:p:32-72
    DOI: 10.1111/sjoe.12489
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    Cited by:

    1. Eggenberger, Christian & Janssen, Simon & Backes-Gellner, Uschi, 2022. "The value of specific skills under shock: High risks and high returns," Labour Economics, Elsevier, vol. 78(C).
    2. Peter Skott, 2024. "Conflict inflation: Keynesian path dependency or Marxian cumulation?," Working Papers PKWP2406, Post Keynesian Economics Society (PKES).
    3. Erling Barth & Henning Finseraas & Anders Kjelsrud & Karl O. Moene, 2021. "Does the Rise of China Lead to the Fall of European Welfare States?," Working Papers 202107, Oslo Metropolitan University, Oslo Business School.
    4. Fanfani, Bernardo, 2023. "The employment effects of collective wage bargaining," Journal of Public Economics, Elsevier, vol. 227(C).

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    More about this item

    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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