TY - JOUR
T1 - Foreign direct investment, unionised labour markets and welfare
AU - Cao, Jiyun
AU - Mukherjee, Arijit
PY - 2018/11
Y1 - 2018/11
N2 - Although empirical evidence on the relationship between labour union and foreign direct investment (FDI) is mixed, the theoretical literature mainly explains the negative relationship between labour union and FDI. We show that a multinational firm may prefer FDI in the presence of labour unions if it is sufficiently technologically superior to its domestic counterpart. FDI (compared to export) makes the domestic labour union better off but it makes the consumers, the domestic firm, the foreign labour union and the foreign country worse off, and may reduce domestic welfare. We show the implications of industry-wide and firm-specific labour unions.
AB - Although empirical evidence on the relationship between labour union and foreign direct investment (FDI) is mixed, the theoretical literature mainly explains the negative relationship between labour union and FDI. We show that a multinational firm may prefer FDI in the presence of labour unions if it is sufficiently technologically superior to its domestic counterpart. FDI (compared to export) makes the domestic labour union better off but it makes the consumers, the domestic firm, the foreign labour union and the foreign country worse off, and may reduce domestic welfare. We show the implications of industry-wide and firm-specific labour unions.
KW - Foreign direct investment
KW - Labour union
KW - Welfare
UR - http://www.scopus.com/inward/record.url?scp=85046798026&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-85046798026&origin=recordpage
U2 - 10.1016/j.iref.2018.04.004
DO - 10.1016/j.iref.2018.04.004
M3 - RGC 21 - Publication in refereed journal
SN - 1059-0560
VL - 58
SP - 330
EP - 339
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
ER -
