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Wage Bargaining, Vertical Differentiation and Intra-industry Trade Liberalization

Published online by Cambridge University Press:  09 January 2015

Emanuele Bacchiega
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Summary

This article appraises the effects of trade liberalization between two industries that have different endowments of skilled labor. Skilled labor is necessary for the production of higher-quality variants of a vertically differentiated good. Skilled labor endowments, therefore, determine the patternof specialization of industries as well as their market structure, both in the final goods market and in the labor market. We analyze how market integration benefits or harms the agents in the industries by delving into the linkages between labor and product markets, and show that bilateral losses from trade can emerge at equilibrium.

Cet article évalue les effets de la libéralisation des échanges entre deux industries qui ont différentes dotations de main-d'œuvre qualifiée. La main-d'œuvre qualifiée est nécessaire pour la production des variantes de qualité élevée d'un bien différencie verticalement. Les dotations main-d'œuvre qualifiée, par conséquent, minent le schéma de spécialisation des industries ainsi que la structure des marchés, tant pour le marché des biens finaux que pour le marché du travail. Nous analysons comment l'intégration économique ou bénéficie ou porte préjudice aux agents dans les industries en étudiant les liens entre les marchés du travail et des produits et montrons que des pertes bilatérales suivantes l'ouverture du commerce peuvent émerger à l'équilibre.

Keywords

Vertical differentiationwage bargainingtrade liberalizationL13J51F16Différenciation verticaleNégociation salarialeLibéralisation des échangesL13J51F16
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 79 , Issue 1 , March 2013 , pp. 35 - 57
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2013 

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Footnotes

*

Dipartimento di Scienze Economiche, Alma Mater Studiorum – Università di Bologna, Piazza Scaravilli 2, 40126 Bologna, Italia. E-mail: [email protected]. I wish to thank the Editor and two anonymous referees for useful comments and suggestions. Needless to say, all the remaining errors are mine.

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