Wage Differentials: Trade Openness and Wage Bargaining

Gustavo Gonzaga, Beatriz Muriel Hernández and Cristina Terra

No 2014-11, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We build a theoretical model that incorporates unionization in the labor market into a Heckscher-Ohlin-Samuelson (HOS) framework to investigate the impact of unionization on the Stolper-Samuelson Theorem. To capture the American economy case, we assume that unskilled labor in the manufactured goods sector is unionized, and that sector is intensive in skilled labor, and that trade liberalization increases the relative price of manufactured goods. In the HOS model, trade liberalization induces a reallocation of production towards the sector that uses intensively the country's most abundant factor. The resulting change in relative labor demand impacts wage bargaining in the unionized sector, which, in turn, has a dampening effect on the Stolper-Samuelson effect. Moreover, wages of unionized workers are even less responsive to trade liberalization. Through traditional mandated-wages regressions, we show that skilled-wage differentials changes were less pronounced among more unionized sectors in the U.S. economy for the 1979-1990 period.

Keywords: Stolper-Samuelson Theorem; wage bargaining; unionization (search for similar items in EconPapers)
JEL-codes: F16 J31 J51 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-int and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://thema.u-cergy.fr/IMG/documents/2014-11.pdf (application/pdf)

Related works:
Journal Article: Wage Differentials: Trade Openness and Wage Bargaining (2014)
Working Paper: Wage differentials: Trade Openness and Wage Bargaining (2014)
Working Paper: Wage Differentials: Trade Openness and Wage Bargaining (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2014-11

Access Statistics for this paper

More papers in THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise Contact information at EDIRC.
Bibliographic data for series maintained by Stefania Marcassa ( this e-mail address is bad, please contact ).