Globalization and Union Opposition to Technological Change
31 Pages Posted: 26 Apr 2005
Date Written: January 2005
Abstract
We find that trade unions have a rational incentive to oppose the adoption of labor-saving technology when labor demand is inelastic and unions care much for employment relative to wages. Trade liberalization typically increases trade union technology opposition. These conclusions are reached in a model of international duopoly with monopoly wage setting in one of the countries, and two-way trade. An important stepping-stone for the result is to note that even though trade liberalization means a tougher competitive environment for firms, labor demand tends to increase. We also find that the incentive for technology opposition is stronger in the more technologically advanced country and in the country with the larger home market, complementing earlier explanations for technological catch-up and leapfrogging.
Keywords: Trade liberalization, technology adaption, international unionized oligopoly
JEL Classification: F12, F16, J51, L13, O33
Suggested Citation: Suggested Citation
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