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Union Behavior, Industry Rents, and Optimal Policies

Phillip Swagel

No 1996/143, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the supposed welfare gains from strategic trade and industrial policies in the U.S. steel industry. Strategic policies to capture labor rents lead to an endogenous response which greatly diminishes their importance. On the other hand, reducing domestic labor market distortions results in welfare gains nearly as large as those from optimal trade and industrial policies. The paper concludes that the focus on labor rents as the subject of U.S. trade and industrial policy is overstated, at least in manufacturing industries such as integrated steel.

Keywords: WP; cost function; labor rent; EU firm; input mix; welfare gain; market power; firm behavior; factor market; Wages; Trade policy; Capacity utilization; Labor share; Europe (search for similar items in EconPapers)
Pages: 31
Date: 1996-12-01
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Journal Article: Union behavior, industry rents, and optimal policies (2000) Downloads
Working Paper: Union behavior, industry rents, and optimal policies (1993) Downloads
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Handle: RePEc:imf:imfwpa:1996/143