On Footloose Industries and Labor Disputes with Endogenous Information Asymmetry

23 Pages Posted: 20 Apr 2013

See all articles by Nancy H. Chau

Nancy H. Chau

Cornell University - School of Applied Economics and Management; IZA Institute of Labor Economics

Ravi Kanbur

Cornell University; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: May 2013

Abstract

If capital becomes internationally mobile but labor does not, are outcomes of labor disputes tilted in favor of workers or employers? In this paper, we show that the answer depends critically on how the information structure of the dispute changes endogenously with capital mobility, and in addition, whether international investment incentives selectively favor the outflow of capital from the most or the least productive firms. In doing so, this paper brings together three strands of literature that are not often seen together — incentive compatible contracting, wage and unemployment outcomes of labor disputes, and international capital mobility with heterogeneous firms.

Suggested Citation

Chau, Nancy H. and Kanbur, Ravi, On Footloose Industries and Labor Disputes with Endogenous Information Asymmetry (May 2013). Review of Development Economics, Vol. 17, Issue 2, pp. 319-341, 2013. Available at SSRN: https://ssrn.com/abstract=2254215 or http://dx.doi.org/10.1111/rode.12034

Nancy H. Chau (Contact Author)

Cornell University - School of Applied Economics and Management ( email )

Ithaca, NY 14853
United States
607-255-4463 (Phone)
607-255-9984 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ravi Kanbur

Cornell University ( email )

301-J Warren Hall
Ithaca, NY 14853
United States
607-255-7966 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://www.kanbur.dyson.cornell.edu

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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