Wage bargaining and multinational firms in general equilibrium

Arbeitspapier

This paper studies the relationship between wage negotiations and the mode of foreign market penetration in a general equilibrium framework. We analyze the incentives of firms to set up a foreign production facility for improving their bargaining position vis-à-vis local unions. This renders the allocation of bargaining power among firms and unions a key determinant of the share of multinational enterprises and exporting firms. The economic mechanisms in this paper provide novel insights on how wages and unemployment rates adjust to economic integration. We distinguish between short-run effects for a given number of competitors and long-run effects after firm entry/exit. This allows us to identify possible globalization paths and to analyze their consequences for domestic labor markets.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1711

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Integration ; Trade and Labor Market Interactions ; Multinational Firms; International Business ; Trade Unions: Objectives, Structure, and Effects

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eckel, Carsten ; Egger, Hartmut
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/25756
• Last update: 10.03.2025, 11:41 AM CET