Foreign direct investment, unionised labour markets and welfare

Cao, Jiyun; Mukherjee, Arijit

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.

Citation

Cao, J., & Mukherjee, A. (2018). Foreign direct investment, unionised labour markets and welfare. International Review of Economics and Finance, 58, 330-339. https://doi.org/10.1016/j.iref.2018.04.004

• Journal Article Type: Article
• Acceptance Date: Apr 10, 2018
• Online Publication Date: Apr 14, 2018
• Publication Date: 2018-11
• Deposit Date: Apr 11, 2018
• Publicly Available Date: Apr 15, 2019
• Journal: International Review of Economics and Finance
• Print ISSN: 1059-0560
• Electronic ISSN: 1059-0560
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 58
• Pages: 330-339
• DOI: https://doi.org/10.1016/j.iref.2018.04.004
• Keywords: Foreign direct investment; Labour union; Welfare
• Public URL: https://nottingham-repository.worktribe.com/output/925138
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S105905601730878X