Product Market Integration and Wages in Unionized Countries |
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Authors: | Jakob Roland Munch & Jan Rose Skaksen |
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Institution: | Danish Economic Council, Copenhagen, Denmark,;University of Southern Denmark, Odense, Denmark |
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Abstract: | This paper addresses the effects of product market integration on wages. We develop a two–country general equilibrium model of international trade with imperfectly competitive product markets and unionized labor markets. Integration is modelled as either a fall in fixed or variable trade costs. A reduction in fixed trade costs leads to an unambiguous decrease in wages, whereas a reduction in variable trade costs has an ambiguous effect on wages. JEL classification : F 15; J 5; L 13 |
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Keywords: | Economic integration trade unions |
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