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"Price and wage setting in an integrating Europe: firm level evidence." NBB Working Paper No. 93, October 2006

Abraham, Filip, and Konings, Jozef, and Vanormelingen, Stijn. (2006) "Price and wage setting in an integrating Europe: firm level evidence." NBB Working Paper No. 93, October 2006. [Working Paper]

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    Abstract

    Europe has witnessed the last decade an accelerated process of economic integration. Trade barriers were removed, the euro was introduced and ten new member states entered the European Union. Economic integration is likely to have an impact on both labor and product markets. Unlike most other papers, that focus on product and labor markets separately, we look at the link between globalization and product and labor market imperfections simultaneously. To this end, we rely on a rich panel of manufacturing firms in Belgium, a small open economy. We find that union bargaining power is higher in sectors characterized by high price cost margins. Moreover, ignoring imperfections on the labor market, leads to an underestimation of product market power. Concerning the influence of globalization, our main findings are that both price cost margins and union bargaining power are typically lower in sectors that are subject higher international competition. This result is especially true for competition from low wage countries.

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    Item Type: Working Paper
    Uncontrolled Keywords: Mark-ups, Trade Unions, International Trade.
    Subjects for non-EU documents: Countries > Belgium
    EU policies and themes > Policies & related activities > employment/labour market > unions
    EU policies and themes > External relations > globalisation/globalization
    EU policies and themes > External relations > international trade
    EU policies and themes > Policies & related activities > economic and financial affairs > business/private economic activity
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > National Bank of Belgium (Brussels) > Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 22 Mar 2008
    Page Range: p. 40
    Last Modified: 15 Feb 2011 17:49
    URI: http://aei.pitt.edu/id/eprint/7607

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