Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 01/05: Globalisation and union opposition to technological change

Kjell Erik Lommerud (), Frode Meland () and Odd Rune Straume ()
Additional contact information
Kjell Erik Lommerud: University of Bergen, Department of Economics, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway
Frode Meland: University of Bergen, Department of Economics, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway
Odd Rune Straume: University of Minho, Department of Economics, Postal: Campus de Gualtar, 4710-057 Braga, Portugal

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 liberalisation 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 liberalisation 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: Trade liberalisation; technology adoption; international unionised oligopoly.

JEL-codes: F12; F16; J51; L13; O33

28 pages, January 4, 2005

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