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Trade Unions, Wage Bargaining Coordination and Foreign Direct Investment

Radulescu, R.; Robson, M.

Authors

R. Radulescu



Abstract

Conventional wisdom is that a high trade union bargaining strength and a system of coordinated wage bargaining reduce the attractiveness of an economy as a location for foreign direct investment, although there is limited evidence for this. The paper takes panel data for 19 OECD economies to examine the relationship between trade union bargaining strength, bargaining coordi nation, and a range of incentives for inward foreign direct investment. It finds a strong negative effect of trade union density on inward foreign direct investment, which is dependent on the degree of wage bargaining coordination. A high degree of coordination weakens the deterrent effect of high union density, which is consistent with the notion that under certain circumstances a coordinated increase in wages can increase profits of the multinationals by hurting domestic firms.

Citation

Radulescu, R., & Robson, M. (2008). Trade Unions, Wage Bargaining Coordination and Foreign Direct Investment. LABOUR, 22(4), 661-678. https://doi.org/10.1111/j.1467-9914.2008.00430.x

Journal Article Type Article
Publication Date Dec 1, 2008
Deposit Date May 22, 2009
Journal LABOUR
Print ISSN 1121-7081
Electronic ISSN 1467-9914
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 22
Issue 4
Pages 661-678
DOI https://doi.org/10.1111/j.1467-9914.2008.00430.x
Public URL https://durham-repository.worktribe.com/output/1553927

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