Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/64838
Authors: 
Egger, Hartmut
Etzel, Daniel
Year of Publication: 
2012
Series/Report no.: 
CESifo Working Paper: Trade Policy 3929
Abstract: 
This paper sets up a general oligopolistic equilibrium model with two countries that differ in the centralization of union wage setting. Being interested in the consequences of openness, we show that, in the short-run, trade increases welfare and employment in both locations, and it raises income of capital owners as well as workers. In the long run, capital outflows from the country with the more centralized wage setting generate winners and losers and make the two countries more dissimilar in terms of unemployment of welfare. Decentralization of wage setting can successfully prevent capital outflow and the export of jobs.
Subjects: 
general oligopolistic equilibrium
union wage setting
asymmetric labor market institutions
trade liberalization
capital mobility
decentralization in union wage setting
JEL: 
F12
F16
J51
L13
Document Type: 
Working Paper

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