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Union wage demands with footloose firms and agglomeration forces

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  • Persyn, Damiaan

Abstract

This paper considers the wage demand of a sector-level monopoly union facing internationally mobile firms. A simple two-country economic geography model describes how firms relocate in response to international differences in production costs and market size. In contrast to standard models, the union fully takes into account the international mobility of firms. If international differences in labour productivity and market size are small, lower foreign wages or lower trade costs necessarily lead to lower union wage demands. Otherwise, lower foreign wages or trade costs may reduce the sensitivity of the remaining firms in the home country to wage changes, leading to higher union wage demands.

Suggested Citation

  • Persyn, Damiaan, 2013. "Union wage demands with footloose firms and agglomeration forces," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 142-150.
    • Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:142-150
    DOI: 10.1016/j.regsciurbeco.2012.06.005
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    References listed on IDEAS

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    Cited by:

    1. Hosaki Sano, 2018. "Labor union and firm fs relocation: A general oligopolistic equilibrium model analysis," Discussion Papers in Economics and Business 18-15-Rev., Osaka University, Graduate School of Economics, revised May 2018.
    2. Colin Davis & Ken-ichi Hashimoto & Ken Tabata, 2021. "Unionization, Industry Concentration, and Economic Growth," ISER Discussion Paper 1154, Institute of Social and Economic Research, Osaka University.
    3. Egger, Hartmut & Etzel, Daniel, 2014. "Union wage-setting and international trade with footloose capital," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 56-67.

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    More about this item

    Keywords

    Unions; Globalisation; Economic geography;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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