Should Trade Unions Welcome Foreign Investors? First evidence from Danish Matched Employer-Employee Data
17 Pages Posted: 30 Jan 2008 Last revised: 27 Nov 2008
Date Written: January 24, 2008
While foreign direct investment (FDI) is widely believed to have an adverse effect on the bargaining power of unions and hence on union wages, little empirical research has been done to substantiate this conjecture. The present paper aims at filling this gap by analysing the effect of foreign ownership on the union wage premium in Denmark. Using matched employer-employee data, the positive effect of plant level unionisation on wages is found to vanish in foreign-owned firm. This result can help to understand why trade unions frequently resist foreign take-overs even though the existence of a positive foreign ownership wage premium is widely acknowledged in the literature.
Keywords: Collective Bargaining, Foreign Direct Investment, Trade Unions, Wages
JEL Classification: F16, F23, J50
Suggested Citation: Suggested Citation