Working Paper: CEPR ID: DP4836
Authors: Kjell Erik Lommerud; Frode Meland; Odd Rune Straume
Abstract: We find that trade unions have a rational incentive to oppose the adoption of labour-saving technology when labour demand is inelastic and unions care much for employment relative to wages. Trade liberalization typically increases trade union technology opposition. These conclusions are reached in a model of international duopoly with monopoly wage setting in one of the countries, and two-way trade. An important stepping-stone for the result is to note that even though trade liberalization means a tougher competitive environment for firms, labour demand tends to increase. We also find that the incentive for technology opposition is stronger in the more technologically advanced country and in the country with the larger home market, complementing earlier explanations for technological catch-up and leapfrogging.
Keywords: International; Unionized; Oligopoly; Technology; Adaption; Trade Liberalization
JEL Codes: F12; F16; J51; L13; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Trade Liberalization (F13) | Increased Union Opposition to Technology (J51) |
| Labor Demand Inelasticity (J23) | Union Opposition to Labor-Saving Technology (J51) |
| Globalization (F60) | Increased Union Opposition to Technological Changes (J51) |
| Increased Competition (L13) | Greater Union Opposition to Technological Advancements (J51) |
| Trade Liberalization (F13) | Labor Demand Inelasticity (J23) |
| Union Opposition to Technology (O33) | Adverse Effects on Future Generations of Workers (J28) |