Quotation Rocha-Akis, Silvia, Schöb, Ronnie. 2011. Welfare policy in the presence of unionised labour and internationally mobile firms. Scandinavian Journal of Economics 113 (1): 93-119.




To what extent does the welfare state exacerbate the loss of jobs due to offshoring? We consider a model with oligopolistic sectors that are exposed to offshoring, and a unionised labour force that is entitled to unemployment benefits. We find that deeper economic integration induces wage moderation to the point that wages become independent of workers' outside options. Since the entire incidence of redistribution falls on net wages, the unions' willingness to moderate wages is constrained by the level of redistribution. Beyond an upper limit of redistribution, extending the welfare state compels unions to oppose wage moderation at the cost of losing jobs to offshoring. Below that upper limit, however, redistribution becomes less rather than more distortive.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Scandinavian Journal of Economics
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, VW-C, WH-B
Language English
Title Welfare policy in the presence of unionised labour and internationally mobile firms
Volume 113
Number 1
Year 2011
Page from 93
Page to 119


Rocha-Akis, Silvia (Former researcher)
Schöb, Ronnie (Free University Berlin, Germany)
Department of Economics (Kartal) (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5311 Public finance (Details)
5903 Labour market policy (Details)
5953 Game theory (Details)
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