Labor Market Power and the Distorting Effects of International Trade
International Journal of Industrial Organization,
This article examines how final product trade with China shapes and interacts with labor market imperfections that create market power in labor markets and prevent an efficient market outcome. I develop a framework for measuring such labor market power distortions in monetary terms and document large degrees of these distortions in Germany's manufacturing sector. Import competition only exerts labor market disciplining effects if firms, rather than employees, possess labor market power. Otherwise, increasing export demand and import competition both fortify existing distortions, which decreases labor market efficiency. This widens the gap between potential and realized output and thus diminishes classical gains from trade.
Members & Research Doctoral Students Annika Backes ; Doctoral thesis project: tba Dmitri Bershadskyy ; Doctoral thesis project: "Experimental Analysis...
The CompNet Competitiveness Database The Competitiveness Research Network (CompNet)...
Vier Forschungscluster ...
DPE Faculty A B C D E F G H I J...
IWH-FDI-Mikrodatenbank Die IWH-FDI-Mikrodatenbank (FDI = Foreign Direct Investment)...
Potential International Employment Effects of a Hard Brexit
We use the World Input Output Database (WIOD) to estimate the potential employment effects of a hard Brexit in 43 countries. In line with other studies we assume that imports from the European Union (EU) to the UK will decline by 25% after a hard Brexit. The absolute effects are largest in big EU countries which have close trade relationships with the UK like Germany and France. However, there are also large countries outside the EU which are heavily affected via global value chains like China, for example. The relative effects (in percent of total employment) are largest in Malta and Ireland. UK employment will also be affected via intermediate input production. Within Germany, the motor vehicle industry and in particular the “Autostadt” Wolfsburg are most affected.