The effect of globalization on union bargaining and price-cost margins of firms

Filip Abraham (1) , Jozef Konings (2) , Stijn Vanormelingen (3)

1 Faculty of Business and Economics
2 Faculty of Business and Economics and LICOS
3 HU Brussel and LICOS, University of Leuven (KUL)

In recent years, Europe has witnessed an accelerated process of economic integration. This paper analyzes how increased economic integration has affected labor and product markets. We use a panel of Belgian manufacturing firms to estimate price-cost margins and union bargaining power and show how various measures of globalization affect them. Import competition puts pressure on both markups and union bargaining power, especially when there is increased competition from low wage countries. This suggests that increased globalization is associated with a moderation of wage claims in unionized countries, which should be associated with positive effects on employment.

Mots clés: Markups; Trade unions; International trade; F16; J50; L13

Filip Abraham, Jozef Konings, Stijn Vanormelingen. The effect of globalization on union bargaining and price-cost margins of firms. Review of World Economics, 2009, 145 (1), pp.13-36. ⟨10.1007/s10290-009-0003-8⟩. ⟨hal-00535210⟩