Product Market Integration and Wage Formation

Andersen, Torben M.; rensen, Jan Rose S

doi:2000.15.2.280

Journal of Economic Integration 2000 June;15(2) :280-293.
DOI: https://doi.org/10.11130/jei.2000.15.2.280

Product Market Integration and Wage Formation

Torben M. Andersen, Jan Rose S rensen

University of Aarhus

ABSTRACT

This paper analyses the basic labour market inter-dependencies among countries with intra-industrial trade and imperfectly competitive product and labour markets. The paper stresses two major channels through which increased integration may affect product markets and therefore in turn labour markets. First, market entry becomes easier and/or less costly implying that more goods become traded goods. Second, market integration among economies already open to trade may reduce the explicit or implicit trade costs of selling in foreign markets. It is found that the two channels have different implications for wage formation. (JEL Classifications: F12, F15, J31, J51)

Keywords: Trade Costs | Intra-industry Trade | Wage Formation

REFERENCE

1.	Huzinga, H. [1993], "International Market Integration and Union Wage Bargaining," Scandinavian Journal of Economics 95; pp. 249-55.

2.	Oswald, A.J. [1985], "The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics 87; pp. 160-93.