Unionized labor markets and globalized capital markets |
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Authors: | Marta Aloi Manuel Leite-Monteiro |
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Institution: | a School of Economics and Leverhulme Centre for Research on Globalisation and Economic Policy, University of Nottingham, University Park, NG7 2RD Nottingham, UK b Universidade Católica Portuguesa, FCEE, Palma de Cima, 1649-023 Lisboa, Portugal |
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Abstract: | This paper studies the effects of international integration of capital markets in a world where countries differ in their labor market institutions: one country has a perfectly competitive labor market while the other is unionized. We show that workers should favor autarky in the unionized country, but oppose it in the non unionized country and vice versa for owners of capital. Aggregate gains from integration, however, are negative. We also show that, under capital mobility, an increase in relative bargaining power of unions does not always improve workers' welfare. |
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Keywords: | F20 J50 |
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