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The Dilemma of Labor Unions: Local Objectives vs. Global Bargaining

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  • Eckel, Carsten
  • Egger, Hartmut

Abstract

Multinational enterprises are able to improve their disagreement profits by setting up foreign production facilities, with adverse consequences for negotiated wages and union utilities. In this paper, we take a new angle at this issue and analyze whether unions can improve their situation by cooperating internationally. By shifting the focus from firms to unions as the active players, we aim at explaining why unions find it hard to respond to the detrimental shift in bargaining position as a result of globalization and why there is so little evidence for union cooperation within multinational production networks. Our results show that cooperation is clearly beneficial for unions if their preferences regarding wages and employment are similar across countries. If these preferences differ, however, potential production relocations by multinationals create winners and losers among unions, and these distributional effects may impede cooperation.

Suggested Citation

  • Eckel, Carsten & Egger, Hartmut, 2012. "The Dilemma of Labor Unions: Local Objectives vs. Global Bargaining," CEPR Discussion Papers 8784, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:8784
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    Cited by:

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    2. Marco de Pinto & Jörg Lingens, 2019. "Unionization, information asymmetry and the de‐location of firms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(4), pages 1782-1823, November.
    3. Ruben Perez-Sanz, 2024. "International monopoly union coordination under the presence of externalities and costs," International Economics and Economic Policy, Springer, vol. 21(1), pages 181-205, February.
    4. de Pinto, Marco & Michaelis, Jochen, 2019. "The labor market effects of trade union heterogeneity," Economic Modelling, Elsevier, vol. 78(C), pages 60-72.
    5. Domenico Buccella, 2013. "Unions’ bargaining coordination in multinational enterprises," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 4(4), pages 373-392, November.
    6. Tapio Palokangas, 2020. "Public policy, footloose capital, and union influence," Review of International Economics, Wiley Blackwell, vol. 28(4), pages 976-991, September.

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    More about this item

    Keywords

    International cooperation; Labor unions; Multinational enterprise; Union objectives;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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