Product Market Integration and Wages in Unionized Countries

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This paper addresses the effects of product market integration on wages. We develop a two-country general equilibrium model of international trade with imperfectly competitive product markets and unionized labor markets. Integration is modelled as either a fall in fixed or variable trade costs. A reduction in fixed trade costs leads to an unambiguous decrease in wages, whereas a reduction in variable trade costs has an ambiguous effect on wages.
Original languageEnglish
JournalScandinavian Journal of Economics
Volume104
Issue number2
Pages (from-to)289-299
Number of pages11
ISSN0347-0520
DOIs
Publication statusPublished - 2002
Externally publishedYes

ID: 17520071