Exchange Rates and Wages in Unionised Labour Markets
World Bank - Research Department
Peter W Wright
University of Sheffield - Department of Economics
June 7, 2010
We investigate the impact of exchange rate movements on wage determination in unionised labour markets. Using a simple model of international oligopoly, we show that organised labour has a rational incentive to accept lower wages in the face of a currency appreciation. This proposition is examined empirically using a matched worker-firm dataset for Portugal. We find results consistent with the predictions of the model, though the impact varies considerably with both worker characteristics and the regional unemployment rate.
Number of Pages in PDF File: 24
Keywords: Exchange Rates, Trade Unions, Wage Bargaining, Worker-Firm Data
JEL Classification: F31, J3, J5working papers series
Date posted: June 7, 2010
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