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Do investors avoid strong trade unions and labour regulation? Social dumping in the European automotive and chemical industries

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  • Krzywdzinski, Martin

Abstract

The eastern enlargement of the European Union has prompted heated debates about social dumping related to labour standards and industrial relations. Capital mobility is seen as a crucial social dumping mechanism. The article uses time-series-cross-section data for the years 1999–2008 to analyse the determinants of capital flows (FDI) to European countries. It compares German and US FDI in the automotive and chemical industry. The article shows that FDI is influenced by labour standards (in particular protection against dismissals) and industrial relations factors and can be a social dumping mechanism. There are, however, differences according to the industries and the home countries of the investors. US companies try to avoid coordinated collective bargaining, while German companies consider government intervention in collective bargaining negative. The degree of unionization shows no effect on attractiveness for FDI.

Suggested Citation

  • Krzywdzinski, Martin, 2014. "Do investors avoid strong trade unions and labour regulation? Social dumping in the European automotive and chemical industries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 28(6), pages 926-945.
    • Handle: RePEc:zbw:espost:190828
    DOI: 10.1177/0950017013516692
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    1. 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.
    2. Wen Wang & Jason Heyes & Roger Seifert, 2023. "Trade union influence on innovation in the British private sector: Direct and indirect paths," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 44(2), pages 604-627, May.
    3. Nina Pološki Vokić & Maja Klindžić, 2022. "The country-of-origin and country-of-operations effect on organised labour in multinational companies – exploring the role of labour relations models," Transfer: European Review of Labour and Research, , vol. 28(4), pages 409-422, November.
    4. Burçak Polat, 2017. "Rate of return on foreign investment income and employment labour protection: A panel analysis of thirty OECD countries," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1273588-127, January.

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