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Title:International trade, union wage premia, and welfare in general equilibrium PDF Logo
Authors:Kreickemeier, Udo
Meland, Frode
Issue Date:2011
Series/Report no.:CESifo working paper: Trade Policy 3407
Abstract:We study how two distinct forms of globalisation, trade cost reductions and opening up of trade in previously shielded sectors, affect sector-specific wages, employment levels and aggregate welfare in a two-country model of general oligopolistic equilibrium (GOLE) with partly unionised labour markets. We find that both forms of globalisation increase union coverage, and they also lead to a lower union wage premium in shielded sectors. In contrast, the union wage premium in open sectors and aggregate welfare are affected differently by the two types of globalisation. Trade cost reductions in open sectors always lead to higher union wage premia and to lower aggregate welfare, while an increased number of open sectors lowers the union wage premium, and it may also increase welfare.
Subjects:globalisation
unions
non-traded goods
general oligopolistic equilibrium
JEL:F12
F15
F16
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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