 Union Wage Strategies and International TradeRobin Naylor () The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics Abstract: In this paper, we analyze the relationship between wage outcomes and the nature of international trade and economic integration when labour markets are unionized and a homogeneous product market is characterized by intra-industry trade. We characterize the full set of possible trade regimes for different combinations of wages and derive unions' wage reaction functions. We show that a unions' choice between a high and a low-wage strategy will depend on the value of the trade costs. We find that: (i) compared to a non-union setting, unions reduce the prohibitive trade cost and that (ii) this rules out trade in that region of trade costs over which, in the non-union model. welfare falls as trade costs fall, (iii) in any trade equilibrium, falling trade costs lead monopoly unions to set higher wages, (iv) there is a range of trade costs for which equilibrium is non-existent and (v) the characterization of the union wage-setting as a Prisioners' Dilemma and hence the incentives for international union coordination of wage demands, depend upon the extent of trade costs. Keywords: international trade; tariffs; economic integration; wage determination; union bargaining (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:480 Access Statistics for this paper More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics Contact information at EDIRC. |
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