Unionized Wage Setting and the Location of Firms

Karolien De Bruyne ()

Working Papers of VIVES - Research Centre for Regional Economics from KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics

Abstract: We analyze how unionized wage setting a¤ects the location of firms. We find that the degree of centralization (at firm or sectoral level) and regionalization (at regional or supra-regional level) is crucial. We show that wage setting at the firm level is the best policy to attract firms when trade costs are low, while wage setting at a more centralized level is most effective to attract firms when trade costs are high. Moreover, wage setting at the supra-regional level is beneficial for the already more agglomerated region and hurts the peripheral region.

Keywords: location; unions; regionalization; centralization (search for similar items in EconPapers)
JEL-codes: F12 J51 R12 R3 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-bec, nep-cse, nep-geo, nep-lab and nep-ure
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