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On Footloose Industries, Asymmetric Information and Wage Bargaining

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  • Kanbur, Ravi
  • Chau, Nancy H

Abstract

If capital becomes internationally mobile but labor does not, is the bargaining outcome for workers worsened? In this paper we show that the answer to this question depends critically on the information structure of the bargaining process. In particular, we demonstrate a hitherto underappreciated informational role of capital mobility in determining the distribution of output between workers and employers. In doing so we bring together three strands of literature not often seen together--incentive compatible contracting, union-employer bargaining, and the consequences of capital mobility.

Suggested Citation

  • Kanbur, Ravi & Chau, Nancy H, 2003. "On Footloose Industries, Asymmetric Information and Wage Bargaining," CEPR Discussion Papers 4095, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4095
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    Cited by:

    1. Nicola Acocella & Giovanni Bartolomeo, 2004. "Is a Conservative Central Banker a (Perfect) Substitute for Wage Coordination?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 31(2), pages 281-294, June.
    2. Basu, Kaushik, 2006. "Globalization, poverty, and inequality: What is the relationship? What can be done?," World Development, Elsevier, vol. 34(8), pages 1361-1373, August.
    3. Kaushik Basu, 2016. "Beyond the Invisible Hand: Groundwork for a New Economics," Economics Books, Princeton University Press, edition 1, number 9299.

    More about this item

    Keywords

    Foreign direct investment; Bargaining under asymmetric information; Union wage; Employment;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • F2 - International Economics - - International Factor Movements and International Business
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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