Wage bargaining and multinational firms

Carsten Eckel () and Hartmut Egger ()

Journal of International Economics, 2009, vol. 77, issue 2, pages 206-214

Abstract: We set up a general equilibrium model with heterogeneous firms to study the interaction between wage bargaining and foreign direct investment. Thereby, we highlight the incentives of firms to invest abroad in order to improve their bargaining position vis--vis local unions and we show how changes in the bargaining power of unions affect the share of multinational firms in an open economy. In addition, taking into account this relationship between wage bargaining and foreign direct investment, our analysis provides novel insights on how labor income and the unemployment rate adjust to economic integration and how changes in the bargaining power of unions affect these two labor market variables.

Keywords: Multinational; firms; Economic; integration; Wage; bargaining; Unemployment (search for similar items in EconPapers)
Date: 2009
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Persistent link: http://EconPapers.repec.org/RePEc:eee:inecon:v:77:y:2009:i:2:p:206-214

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