Unions, Competition, and International Trade in General Equilibrium

Paulo Bastos and Udo Kreickemeier

Chapter 6 in International Trade and Labor Markets:Welfare, Inequality and Unemployment, 2017, pp 143-172 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We develop a two-country, multi-sector model of oligopoly in which unionized and non-unionized sectors interact in general equilibrium. The model is used to study the impact of trade liberalization, deunionization and firm entry on wages in unionized and nonunionized sectors, and on welfare. We find that a shift from autarky to free trade increases non-union wages and welfare, whereas the effect on union wages is ambiguous. We also show that partial deunionization leads to higher wages in both unionized and non-unionized sectors, but only increases welfare when the proportion of unionized sectors is sufficiently low. Finally, wages in non-unionized sectors necessarily increase with firm entry, while the response of union wages and welfare depends on the trade regime.

Keywords: International Trade; Inequality; Labor Markets; Unemployment; Offshoring (search for similar items in EconPapers)
JEL-codes: J01 (search for similar items in EconPapers)
Date: 2017
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Related works:
Journal Article: Unions, competition and international trade in general equilibrium (2009)
Working Paper: Unions, Competition and International Trade in General Equilibrium (2008)
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