Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 30/2014: Rent Sharing with Footloose Production. Foreign Ownership and Wages Revisited.

Ragnhild Balsvik () and Morten Sæthre ()
Additional contact information
Ragnhild Balsvik: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Morten Sæthre: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway

Abstract: We present a bargaining model of wage and employment determination, where we show that foreign acquisitions might hurt the bargaining outcome of powerful unions by giving the fi rm a credible threat to move production abroad. Using detailed data on fi rms and workers in manufacturing, including information on union membership and foreign ownership, we fi nd, in line with the predictions of our model, that foreign acquisitions negatively impact the outcome of workers in highly unionized plants.

Keywords: Foreign acquisitions; trade unions; wages.

JEL-codes: F23; J30; J51

28 pages, September 16, 2014

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