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Rent Sharing with Footloose Production. Foreign Ownership and Wages Revisited

Author

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  • Balsvik, Ragnhild

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Sæthre, Morten

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

We present a bargaining model of wage and employment determination, where we show that foreign acquisitions might hurt the bargaining outcome of powerful unions by giving the fi rm a credible threat to move production abroad. Using detailed data on fi rms and workers in manufacturing, including information on union membership and foreign ownership, we fi nd, in line with the predictions of our model, that foreign acquisitions negatively impact the outcome of workers in highly unionized plants.

Suggested Citation

  • Balsvik, Ragnhild & Sæthre, Morten, 2014. "Rent Sharing with Footloose Production. Foreign Ownership and Wages Revisited," Discussion Paper Series in Economics 30/2014, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2014_030
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    Cited by:

    1. Silliman, Mikko & Willén, Alexander, 2024. "Worker Power, Immigrant Sorting, and Firm Dynamics," Discussion Paper Series in Economics 13/2024, Norwegian School of Economics, Department of Economics.
    2. Uwe Jirjahn, 2021. "Foreign ownership and intra-firm union density in Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 42(4), pages 1052-1079, November.
    3. Alex Bryson & Harald Dale-Olsen & Kristine Nergaard, 2016. "Gender Differences in the Union Wage Premium? A Comparative Case Study," DoQSS Working Papers 16-15, Quantitative Social Science - UCL Social Research Institute, University College London.
    4. Dale-Olsen, Harald, 2018. "Wages, Creative Destruction, and Union Networks," IZA Discussion Papers 11894, Institute of Labor Economics (IZA).
    5. Hartmut Egger & Elke Jahn & Stefan Kornitzky, 2020. "Reassessing the foreign ownership wage premium in Germany," The World Economy, Wiley Blackwell, vol. 43(2), pages 302-325, February.
    6. Samuel Dodini & Kjell Salvanes & Alexander L.P. Willén & Kjell G. Salvanes, 2021. "The Dynamics of Power in Labor Markets: Monopolistic Unions versus Monopsonistic Employers," CESifo Working Paper Series 9495, CESifo.
    7. Elin Svarstad & Ragnar Nymoen, 2023. "Wage inequality and union membership at the establishment level: An econometric study using Norwegian data," Oxford Economic Papers, Oxford University Press, vol. 75(2), pages 371-392.
    8. Nguyen, Dao Thi Hong, 2019. "Inward foreign direct investment and local wages: The case of Vietnam’s wholesale and retail industry," Journal of Asian Economics, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    Foreign acquisitions; trade unions; wages.;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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