Ragnhild Balsvik presents at VATT Institute for Economic Research

21 March 2016 14:09

Ragnhild Balsvik presents at VATT Institute for Economic Research

Ragnhild Balsvik presents her paper “Rent Sharing with Footloose Production: Foreign Ownership, Unions and Wages” (joint with Morten Sæthre) at the VATT Institute for Economic Research in Helsinki.

Date: Thursday, March 17

Abstract: We present a bargaining model of wage setting that predicts that foreign acquisitions might hurt the bargaining outcome of powerful unions
by giving the rm a credible threat to shift production abroad. We test this prediction with matched employer{employee data that include plant-level information on union density. In particular, we use a diff erences-in-differences approach to compare the change in wages after an acquisition in plants with high and low union density. Foreign acquisitions are associated with signi ficantly lower wages for the group of plants with high union density compared with the group of plants with low union density, and the estimated eff ect is in the range of 2-7%. A matching estimator gives similar results.