Foreign Direct Investment, Labour Market Regulation and Self-Interested Governments

Arbeitspapier

This document examines foreign direct investment (FDI) when multinationals and labour unions bargain over labour contracts and lobby the self-interested government for taxation and labour market regulation. We demonstrate that right-to-manage bargaining predicts higher returns for FDI than does non-unionization or efficient bargaining. This advantage is further magnified in the presence of credible wage contracts. When the labour market is nonunionized, or there is a bargain over employment, the ruling elite reaps the surplus of FDI through taxation or regulation. In the absence of credible contracts, unions have incentives to claim a bigger share of the revenue of FDI.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 793

Classification and Topics

• Classification: Wirtschaft ; Positive Analysis of Policy Formulation and Implementation ; Trade Unions: Objectives, Structure, and Effects ; Multinational Firms; International Business ; International Investment; Long-term Capital Movements
• Subject: foreign direct investment ; labour market regulation ; lobbying ; Direktinvestition ; Investitionsrisiko ; Multinationales Unternehmen ; Gewerkschaftlicher Organisationsgrad ; Lohnverhandlungstheorie ; Interessenpolitik ; Arbeitsmarktflexibilisierung ; Standortfaktor ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Palokangas, Tapio
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/20038
• Last update: 10.03.2025, 11:44 AM CET