Wage Differentials: Trade Openness and Wage Bargaining

Gustavo Gonzaga, Cristina Terra and Batriz Muriel Hernandes
Authors registered in the RePEc Author Service: Beatriz Muriel Hernández

No 619, Textos para discussão from Department of Economics PUC-Rio (Brazil)

Abstract: We build a theoretical model that incorporates unionization in the labor market into a Heckscher-Ohlin-Samuelson (HOS) framework to in- vestigate the impact of unionization on the Stolper-Samuelson Theorem. To capture the American economy case, we assume that unskilled labor in the manufactured goods sector is unionized, and that sector is intensive in skilled labor, and that trade liberalization increases the relative price of manufactured goods. In the HOS model, trade liberalization induces a reallocation of production towards the sector that uses intensively the country's most abundant factor. The resulting change in relative labor de- mand impacts wage bargaining in the unionized sector, which, in turn, has a dampening e ect on the Stolper-Samuelson e ect. Moreover, wages of unionized workers are even less responsive to trade liberalization. Through traditional mandated-wages regressions, we show that skilled-wage di er- entials changes were less pronounced among more unionized sectors in the U.S. economy for the 1979-1990 period.

Pages: 19p
Date: 2014-04
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.econ.puc-rio.br/uploads/adm/trabalhos/files/td619.pdf (application/pdf)

Related works:
Journal Article: Wage Differentials: Trade Openness and Wage Bargaining (2014)
Working Paper: Wage differentials: Trade Openness and Wage Bargaining (2014)
Working Paper: Wage Differentials: Trade Openness and Wage Bargaining (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rio:texdis:619

Access Statistics for this paper

More papers in Textos para discussão from Department of Economics PUC-Rio (Brazil) Contact information at EDIRC.
Bibliographic data for series maintained by (flavia@econ.puc-rio.br).