Foreign direct investment, unionised labour markets and welfare

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Cao, Jiyun and Mukherjee, Arijit (2018) Foreign direct investment, unionised labour markets and welfare. International Review of Economics and Finance . ISSN 1059-0560

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Abstract

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.

Item Type: Article
Keywords: Foreign direct investment; Labour union; Welfare
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > Nottingham University Business School
Identification Number: https://doi.org/10.1016/j.iref.2018.04.004
Depositing User: Eprints, Support
Date Deposited: 11 Apr 2018 09:34
Last Modified: 14 Apr 2019 04:30
URI: https://eprints.nottingham.ac.uk/id/eprint/51083

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