(De)Unionisation, Trade Liberalisation and Selection

Catia Montagna, Antonella Nocco

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

The effects of union bargaining power and trade liberalisation on industry selection are analysed within a two-country heterogeneous-firm model with firm-specific unions and inter-country asymmetries in size and union power. Union bargaining power is shown to have more nuanced effects on efficiency and welfare than what typically suggested by conventional wisdom. Whilst the higher wages resulting from an unfavourable union power differential harm firms’ competitiveness, by reinforcing standard market access mechanisms, they give rise to aggregate demand effects that can act as a catalyst for industry and result in a pro-variety effect.
Original languageEnglish
Pages (from-to)91-122
Number of pages32
JournalMetroeconomica
Volume66
Issue number1
Early online date22 Oct 2014
DOIs
Publication statusPublished - 28 Feb 2015

Keywords

  • Unionization
  • Trade liberalization
  • Competitive selection

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