The impact of trade on employment, welfare, and income distribution in unionized general oligopolistic equilibrium

Arbeitspapier

This paper sets up a general oligopolistic equilibrium model with unionized labor markets. By accounting for productivity differences, the model features profit and wage differentials across industries. We use this setting to study the impact of trade liberalization on employment, welfare, and the distribution of income. In particular, we show that a movement from autarky to free trade with a symmetric partner country lowers union wage claims and therefore stimulates employment and raises welfare. Whether firms can extract a larger share of rents in the open economy depends on the competitive environment as well as on the degree of centralization in union wage setting. Finally, the distribution of profit income across firm owners remains unaffected, while the distribution of wage income becomes more equal when a country opens up to trade.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2895

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Trade and Labor Market Interactions ; Trade Unions: Objectives, Structure, and Effects ; Oligopoly and Other Imperfect Markets
• Subject: general oligopolistic equilibrium ; unionized labor market ; trade liberalization ; income distribution

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Egger, Hartmut ; Etzel, Daniel
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/30454
• Last update: 10.03.2025, 11:42 AM CET