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Firm Selection and the Role of Union Heterogeneity
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 Melit...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 43-2017) |
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| Main Authors: | , |
| Format: | Article |
| Language: | English |
| Published: |
2017
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | 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. |
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| Physical Description: | 32 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0529 |