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Author Etzel, Daniel ♦ Egger, Hartmut
Source EconStor
Content type Text
Publisher Verein für Socialpolitik
File Format PDF
Language English
Subject Domain (in DDC) Social sciences ♦ Economics
Subject Keyword general oligopolistic equilibrium ♦ unionized labor market ♦ trade liberalization ♦ income distribution ♦ Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ♦ Trade and Labor Market Interactions ♦ Trade Unions: Objectives, Structure, and Effects
Abstract 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.
Part of series Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Foreign Direct Investment, Employment and Wages xB4-V2
Learning Resource Type Article
Publisher Date 2010-01-01
Publisher Place Frankfurt a. M.
Rights Holder http://www.econstor.eu/dspace/Nutzungsbedingungen