IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v52y2019i4p1782-1823.html
   My bibliography  Save this article

Unionization, information asymmetry and the de-location of firms

Author

Listed:
  • Marco Pinto
  • Jörg Lingens

Abstract

We analyze the effects of unionization on the decision of a firm to de-locate internationally. In a model in which home and foreign workers are perfect substitutes and firms have an informational advantage concerning their productivity, the union offers a menu of wageemployment contracts. Because firms' outside options (producing abroad) depend on productivity, the problem is characterized by countervailing incentives. With the foreign profit sufficiently increasing in productivity, the overstating incentive dominates in equilibrium. Contracts are then characterized by overemployment. The union also affects the extensive margin. High-productivity firms are excluded because this narrows the possibility to overstate productivity, which saves on information rent. Using a numerical simulation, we show that these effects are quantitatively sizable.

Suggested Citation

  • Marco Pinto & Jörg Lingens, 2019. "Unionization, information asymmetry and the de-location of firms," Canadian Journal of Economics, Canadian Economics Association, vol. 52(4), pages 1782-1823, November.
    • Handle: RePEc:cje:issued:v:52:y:2019:i:4:p:1782-1823
    DOI: 10.1111/caje.12418
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/caje.12418
    Download Restriction: access restricted to subscribers
    File URL: https://libkey.io/10.1111/caje.12418?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:52:y:2019:i:4:p:1782-1823. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Werner Antweiler (email available below). General contact details of provider: https://edirc.repec.org/data/ceaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.