Trade Unions in an Open Economy: A General Equilibrium Analysis*

This paper derives a general equilibrium demand-for-labour schedule within the Heckscher-Ohlin-Samuelson model of a large open economy, and then introduces an economy-wide labour union that maximizes its utility subject to this demand schedule, thereby determining the real wage and hence total employment A parametric shift's comparative-static effects on the equilibrium levels of unemployment and welfare are analyzed within this fully unionized economy.