Trade Liberalisation, Subcontracting and Unionised Wage

Dibyendu Maiti () and Arijit Mukherjee

Discussion Papers from University of Nottingham, GEP

Abstract: We develop a simple framework to show the effects of trade cost reduction on unionized wage, employment and domestic welfare when a domestic firm strategically chooses the amount of formal in-house production and subcontracting to the informal sector. We show that a lower trade cost increases unionized wage and domestic firm’s formal production and employment, and reduces its informal production. Free trade maximizes domestic welfare if the trade cost represents a transportation cost. However, if the trade cost represents a domestic tariff, the domestic welfare maximizing tariff is positive.

Keywords: In-house production; Informal sector; Subcontracting; Wage; welfare (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.nottingham.ac.uk/gep/documents/papers/2010/10-07.pdf (application/pdf)

Related works:
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:not:notgep:10/07

Access Statistics for this paper

More papers in Discussion Papers from University of Nottingham, GEP School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC.
Bibliographic data for series maintained by Hilary Hughes ().