Details
| Original language | English |
|---|---|
| Pages (from-to) | 1-22 |
| Number of pages | 22 |
| Journal | Labour : review of labour economics and industrial relations |
| Volume | 32 |
| Issue number | 1 |
| Early online date | 6 Feb 2018 |
| Publication status | Published - Mar 2018 |
| Externally published | Yes |
Abstract
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.
ASJC Scopus subject areas
- Social Sciences(all)
- Demography
- Social Sciences(all)
- Geography, Planning and Development
Sustainable Development Goals
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In: Labour : review of labour economics and industrial relations , Vol. 32, No. 1, 03.2018, p. 1-22.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Flexibility in Wage Setting Under the Threat of Relocation
AU - Goeddeke, Anna
AU - Haucap, Justus
AU - Herr, Annika
AU - Wey, Christian
N1 - Funding Information: *We like to thank the editors, and two anonymous referees for their valuable comments. Christian Wey gratefully acknowledges financial support by the German Science Foundation (Grant WE 4228/2-2). 1ESB Business School, Reutlingen, Germany. 2Heinrich Heine University Du€sseldorf, Du€sseldorf Institute for Competition Economics (DICE), Du€sseldorf, Germany. 3Heinrich Heine University Du€sseldorf, Du€sseldorf Institute for Competition Economics (DICE), Universitatsstr. 1, 40225 Du€sseldorf, Germany. E-mail: herr@dice.hhu.de
PY - 2018/3
Y1 - 2018/3
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=85041614191&partnerID=8YFLogxK
U2 - 10.1111/labr.12118
DO - 10.1111/labr.12118
M3 - Article
AN - SCOPUS:85041614191
VL - 32
SP - 1
EP - 22
JO - Labour : review of labour economics and industrial relations
JF - Labour : review of labour economics and industrial relations
SN - 1121-7081
IS - 1
ER -