Labour market power and the distorting effects of international trade

Matthias Mertens

No 18/2018, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: This article examines how trade shocks shape labour market imperfections that create market power in labour markets and prevent an efficient allocation of labour. I develop a framework for measuring such labour market distortions in monetary terms and document large degrees of those distortions in Germany's manufacturing sector. Import competition can only exert labour market disciplining effects when firms rather than workers have labour market power. Otherwise, export demand and import competition shocks tend to fortify existing distortions by amplifying labour market power structures. This diminishes the gains from trade compared to a model with perfectly competitive labour markets.

Keywords: international trade; market power; labour markets; allocative efficiency (search for similar items in EconPapers)
JEL-codes: D24 F14 F16 J50 L13 L60 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-com, nep-int and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.econstor.eu/bitstream/10419/182527/1/1032223022.pdf (application/pdf)

Related works:
Journal Article: Labor market power and the distorting effects of international trade (2020)
Working Paper: Labour market power and the distorting effects of international trade (2019)
Working Paper: Labor Market Power and the Distorting Effects of International Trade (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:182018

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