Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170556
Authors: 
De Pinto, Marco
Michaelis, Jochen
Year of Publication: 
2017
Series/Report no.: 
IAAEU Discussion Paper Series in Economics 10/2017
Abstract: 
Empirical evidence suggests that high-productivity firms face stronger trade unions than low-productivity firms. Then a policy that puts all unions into a better bargaining position is no longer neutral for firm selection as in models with a uniform bargaining strength across firms. Using a Melitztype model, we show that firm selection becomes less severe. Since more low-productivity firms enter the market, the negative employment effect of unionization is mitigated. Neglecting inter-union differences in bargaining power leads to an overestimation of the negative labor market effects. However, trade liberalization increases unemployment because firms with the least powerful labor unions have to leave the market.
Subjects: 
Trade Unions
Bargaining Power
Firm Heterogeneity
International Trade
Unemployment
JEL: 
F1
F16
J5
Document Type: 
Working Paper

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