Scandinavian Working Papers in Economics

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

No 09/10: North-South technology transfer in unionised multinationals

Kjell Erik Lommerud (), Frode Meland () and Odd Rune Straume ()
Additional contact information
Kjell Erik Lommerud: http://www.uib.no/persons/Kjell-Erik.Lommerud, Postal: Department of Economics, Fosswinckelsgt. 14, N-5007 Bergen, Norway
Frode Meland: http://www.uib.no/persons/Frode.Meland, Postal: Department of Economics, Fosswinckelsgt. 14, N-5007 Bergen, Norway
Odd Rune Straume: University of Minho, Postal: Department of Economics, School of Economics and Management University of Minho, Campus de Gualtar, 4710-057 Braga, Portugal, ,

Abstract: We study how incentives for North-South technology transfers in multinational enterprises are a¤ected by labour market institutions. If workers are collectively organised, incentives for technology transfers are partly governed by ?rms? desire to curb trade union power. This will a¤ect not only the extent but also the type of technology transfer. While skill upgrading of southern workers bene?ts these workers at the expense of northern worker welfare, quality upgrading of products produced in the South may harm not only northern but also southern workers. A minimum wage policy to raise the wage levels of southern workers may spur technology transfer, possibly to the extent that the utility of northern workers decline. These conclusions are reached in a setting where a unionised multinational multiproduct ?rm produces two vertically di¤erentiated products in northern and southern subsidiaries, respectively.

Keywords: North-South technology transfer; Multinationals; Trade unions; Minimum wages

JEL-codes: F23; J51; O33

34 pages, September 23, 2010

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