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Trade and Wages When the Trade Regime is Determined Endogenously
Author(s) -
Naylor Robin
Publication year - 2000
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00241
Subject(s) - economics , wage , trade union , product (mathematics) , product market , trade barrier , free trade , international economics , labour economics , microeconomics , geometry , mathematics , incentive
The paper shows that whether trade is one‐way or two‐way depends on wage strategies adopted by trade unions. The union’s wage strategy choices themselves depend upon the conditions under which trade takes place, as well as upon the characteristics of both the labor and the product markets in the trading countries. Thus, trade and labor market outcomes are determined endogenously. Testable hypotheses are generated, and the implications of the theoretical model for the econometric analysis of trade and wages are discussed.