Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/168580
Authors: 
Goeddeke, Anna
Haucap, Justus
Herr, Annika
Wey, Christian
Year of Publication: 
2017
Series/Report no.: 
DICE Discussion Paper 269
Abstract: 
Relocation of production to countries with low labour cost have induced increased labour market flexibility, which has been praised as a silver bullet for economic growth and low unemployment. Within a unionised oligopoly framework, in which a multi-national firm has the option to relocate its production to a foreign country, we analyse the welfare implications of both centralised and flexible wage setting regimes. For very low foreign wages, wage flexibility leads to higher welfare than a rigid centralised regime. In contrast, for 'intermediate' wage levels in the foreign country, an industry-wide uniform wage leads to higher social welfare than flexible wages.
Subjects: 
Union
Centralised Wage
Wage Flexibility
Relocation
Labour Market Flexibility
JEL: 
F23
J51
L13
ISBN: 
978-3-86304-268-4
Document Type: 
Working Paper

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