International Specialization and Labor Unions: Evidence from Oecd Countries
38 Pages Posted: 30 Jan 2006 Last revised: 22 Apr 2008
Date Written: April 1, 2008
The aim of this paper is to explore the role of institutional determinants of international comparative advantage. Starting from a theoretically well founded general equilibrium framework, where specialization depends on relative factor endowments and technological differences, we study the possible additional effect of labor unions. Using country-year panel data, we obtain that they are an important determinant of relative economic performance for a sample of manufacturing sectors. In particular low wages-labor intensive industries turn out to be relatively disadvantaged, while high wages-capital intensive sectors are relatively advantaged by stronger labor unions. We also allow for different institutional scenarios, letting unionization patterns interact with different regimes of bargaining coordination and social security systems. Our main conclusions are not substantially altered.
Keywords: Comparative Advantage, International Specialization, Labor Market Institutions, Labor Unions
JEL Classification: F11, F16, J51
Suggested Citation: Suggested Citation