A Note on Free Trade Agreement and Wage Bargaining Structure

Yohanes Riyanto and Jung Hur

No 637, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: Mezzeti and Dinopoulos (1991) show that a free trade agreement (trade liberalization) decreases wage rate. However, Naylor (1998) shows that trade liberalization increases wage rate. Both papers consider tariff as exogenously given. In this paper we show that these conflicting results can be nested into a model of international duopoly with a more general wage bargaining structure. Tariff is endogenously determined in our model. In addition, we also derive crucial implications of the wage bargaining structure on the sustainability of trade liberalization

Keywords: wage bargaining structure; optimal tariff regime; free trade agreement (search for similar items in EconPapers)
JEL-codes: F15 J5 L13 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:feam04:637

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