Autori
Wey, Christian
Goeddeke, Anna
Haucap, Justus
Herr, Annika

Titolo
Flexibility in Wage Setting Under the Threat of Relocation
Periodico
Labour
Anno: 2018 - Volume: 32 - Fascicolo: 1 - Pagina iniziale: 1 - Pagina finale: 22

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.



SICI: 1121-7081(2018)32:1<1:FIWSUT>2.0.ZU;2-1

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