Welfare policy in the presence of unionised labour and internationally mobile firms
Rocha-Akis, Silvia ;  Schöb, Ronnie ;  ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleWelfare policy in the presence of unionised labour and internationally mobile firms
AuthorRocha-Akis, Silvia
AuthorSchöb, Ronnie
EditorUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages33 S.
Series ; 2009,14 : Economics
Keywordsoffshoring; import competition; wage bargaining; oligopoly; redistribution
Classification (DDC)331 Labor economics
336 Public finance
339 Macroeconomics and related topics
AbstractIn oligopolistic industries that are unionised and may be affected by offshoring, falling offshoring costs have a moderating effect on trade unions. They will accept lower sector wages in order to discourage mobile firms from leaving the country. Since such wages are independent of the workers' domestic outside opportunities, wage moderation - induced by deeper economic integration - creates leeway for the government to engage in redistributive policies even if this improves the workers' domestic outside options. Only if the latter become suffciently attractive will redistribution induce some offshoring, and it is only at that level that further economic integration will lead to both wage moderation and offshoring activities. Therefore, our analysis suggests that rather than provoking a downsizing of the welfare state, offshoring defines an upper limit for the generosity of the welfare state below which redistribution becomes less instead of more distortive.
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Lehrstuhl für Finanzwissenschaft mit dem Schwerpunkt Internationale Finanzpolitik
Year of publication2009
Type of documentBook
Terms of use/Rights Nutzungsbedingungen
Created at2009-10-27 : 07:25:53
Last changed2016-01-05 : 02:38:17
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000004029