(De)Unionization, Trade Liberalization and Selection. (22nd October 2014)

• Record Type: Journal Article
• Authors: Montagna, Catia; Nocco, Antonella
• Is Part Of: Metroeconomica. Volume 66:Number 1(2015:Feb.)
• Page Start: 91
• Page End: 122
• Publication Date: 2014-10-22
• Subjects: Economics -- Periodicals; 330
• DOI: 10.1111/meca.12064
• Languages: English
• ISSNs: 0026-1386

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>The effects of union bargaining power and trade liberalization on industry selection are analysed within a two‐country heterogeneous‐firm model with firm‐specific unions and inter‐country asymmetries in size and union power. Union bargaining power is shown to have more nuanced effects on efficiency and welfare than what typically suggested by conventional wisdom. While the higher wages resulting from an <italic>unfavourable</italic> union power differential harm firms' competitiveness, by reinforcing standard market access mechanisms, they give rise to aggregate demand effects that can act as a catalyst for industry and result in a <italic>pro‐variety</italic> effect.</p> </abstract>