Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/106337
Authors: 
Gonzaga, Gustavo
Muriel, Beatriz
Terra, Cristina
Year of Publication: 
2014
Series/Report no.: 
Development Research Working Paper Series 03/2014
Abstract: 
We build a theoretical model that incorporates unionization in the labor market into a Heckscher-Ohlin-Samuelson (HOS) framework to investigate the impact of unionization on the Stolper-Samuelson Theorem. To capture the American economy case, we assume that unskilled labor in the manufactured goods sector is unionized, and that sector is intensive in skilled labor, and that trade liberalization increases the relative price of manufactured goods. In the HOS model, trade liberalization induces a reallocation of production towards the sector that uses intensively the country's most abundant factor. The resulting change in relative labor demand impacts wage bargaining in the unionized sector, which, in turn, has a dampening effect on the Stolper-Samuelson effect. Moreover, wages of unionized workers are even less responsive to trade liberalization. Through traditional mandated-wages regressions, we show that skilled-wage differentials changes were less pronounced among more unionized sectors in the U.S. economy for the 1979-1990 period.
Subjects: 
Stolper-Samuelson Theorem
wage bargaining
unionization
JEL: 
F16
J31
J51
Document Type: 
Working Paper

Files in This Item:
File
Size
545.74 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.