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Foreign Direct Investment and the Unionization Rate

Hiroyuki Nishiyama and Masao Yamaguchi

International Economic Journal, 2010, vol. 24, issue 1, 45-52

Abstract: This paper examines the effect of foreign direct investment (FDI) on home wages by using a model assuming that two complementary intermediate goods are combined into a final product by an international/domestic division of labour. We find that FDI triggers higher (lower) home wages in the case that the ratio of non-unionized workers to unionized workers is sufficiently low (high). In addition, even if domestic and foreign production are complementary, the wages in the case of FDI can become lower than those in the case without FDI, in contrast to Skaksen and Sorensen (2001).

Keywords: Foreign direct investment; multinational firms; wage bargaining; firm's outside option; unionization rate (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1080/10168731003589725

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