Union legislation and export platform FDI

Dermot Leahy, Catia Montagna

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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 unionized 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
    Pages (from-to)437-452
    Number of pages16
    JournalJournal of International Trade & Economic Development
    Volume14
    Issue number4
    DOIs
    Publication statusPublished - 2005

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    Keywords

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

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