Flexibility in wage setting under the threat of relocation
- Relocation of production to countries with low labour costs has induced increased labour market flexibility, which has been praised as a silver bullet for economic growth and low unemployment. Within a unionised oligopoly framework, in which a multinational firm has the option to relocate its production to a foreign country, we analyse the welfare implications of both centralised and flexible wage-setting regimes. For very low foreign wages, wage flexibility leads to higher welfare than a rigid centralised regime. In contrast, for ‘intermediate’ wage levels in the foreign country, an industry-wide uniform wage leads to higher social welfare than flexible wages.
Author of HS Reutlingen | Göddeke, Anna |
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DOI: | https://doi.org/10.1111/labr.12118 |
ISSN: | 1121-7081 |
eISSN: | 1467-9914 |
Erschienen in: | Labour : review of labour economics and industrial relations |
Publisher: | Wiley |
Place of publication: | Oxford |
Document Type: | Journal article |
Language: | English |
Publication year: | 2018 |
Volume: | 32 |
Issue: | 1 |
Page Number: | 22 |
First Page: | 1 |
Last Page: | 22 |
DDC classes: | 650 Management |
Open access?: | Nein |
Licence (German): | In Copyright - Urheberrechtlich geschützt |