Union bargaining power, labour standards and foreign direct investment

Dermot Leahy, Catia Montagna

    Research output: Working paperDiscussion paper

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    Abstract

    This paper examines Foreign Direct Investment in the presence of labour unions. An oligopoly model is developed in which identical firms locate in a host country in order to export to a foreign country. These firms are unionised and compete with foreign firms on the foreign market. We consider the incentives for social dumping via restrictive labour legislation which we assume can be used by the host country government to affect the bargaining power of unions. We ask whether it is in the interest of the importing foreign country for the host country to relax or to tighten labour laws.
    Original languageEnglish
    PublisherUniversity of Dundee
    Publication statusPublished - 2004

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.168
    ISSN (Print)1473-236X

    Keywords

    • Foreign direct investment
    • Labour unions
    • Labour legislation
    • Social dumping
    • Exports

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  • Cite this

    Leahy, D., & Montagna, C. (2004). Union bargaining power, labour standards and foreign direct investment. (Dundee Discussion Papers in Economics; No. 168). University of Dundee.