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Exchange rates and wages in unionised labour markets

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  • Paulo Bastos
  • Peter Wright

Abstract

We investigate the impact of exchange rate movements on wage determination in unionised labour markets. Using a simple model of international oligopoly, we show that organised labour has a rational incentive to accept lower wages in the face of a currency appreciation. This proposition is examined empirically using a matched worker-firm dataset for Portugal. We find results consistent with the predictions of the model, though the impact varies considerably with both worker characteristics and the regional unemployment rate.

Suggested Citation

  • Paulo Bastos & Peter Wright, 2010. "Exchange rates and wages in unionised labour markets," Discussion Papers 10/15, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:10/15
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    Cited by:

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    4. Paulo Bastos & Joana Silva & Rafael Proença, 2016. "Exports and Job Training," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 737-756, September.
    5. Andini, Corrado, 2014. "Fixed Exchange-Rate Policy and Real Wage Growth: Quasi-Experimental Evidence," IZA Discussion Papers 8701, Institute of Labor Economics (IZA).

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