تاثیر تجارت بر اشتغال، رفاه و توزیع درآمد در تعادل انحصاری عمومی اتحادیه
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|11127||2012||17 صفحه PDF||سفارش دهید||14064 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : European Economic Review, Volume 56, Issue 6, August 2012, Pages 1119–1135
This paper sets up a multi-sector general oligopolistic equilibrium trade model in which all firms face wage claims of firm-level unions. By accounting for productivity differences across industries, the model features income inequality along multiple lines, including inequality between firm owners and workers as well as within these two groups of agents, and involuntary unemployment. We use this setting to study the impact of trade liberalization on key macroeconomic performance measures. In particular, we show that a movement from autarky to free trade with a fully symmetric partner country lowers union wage claims and therefore stimulates employment and raises welfare. Whether firms can extract a larger share of rents in the open economy depends on the competitive environment in the product market. Furthermore, the distribution of profit income across firm owners remains unaffected, while the distribution of wage income becomes more equal when a country opens up to trade with a fully symmetric trading partner. We also analyze how country size differences and technological dissimilarity of trading partners affect the results from our analysis.
The distributional effects of international trade are of major concern to the general public and policy makers alike. The common fear is that market integration improves the outside opportunities of firm owners, and hence limits the possibility of workers to skim a fair share of the rents arising from economic activity (OECD, 2007). This issue has been prominently discussed in a large literature on union wage setting in an international oligopoly (see, e.g., Mezzetti and Dinopoulos, 1991, Naylor, 1998 and Lommerud et al., 2003). However, by focussing on rent sharing at the firm or industry level in a partial equilibrium environment, this literature is not well equipped for analyzing the implications of trade on the economy-wide distribution of profit and wage income, an issue that is of primary interest for policy makers who are concerned about the impact of trade on inequality and social justice (Bernanke, 2007 and OECD, 2007). Furthermore, by considering a competitive outside sector that absorbs all workers who do not find a job in unionized industries, existing studies in this literature ignore a key channel through which trade affects inequality, namely changes in the unemployment rate. When being interested in a comprehensive picture of inequality, this seems to be a major shortcoming, since even in countries that offer generous unemployment compensation those who do not find a job are at the lower tail of the income distribution, so that changes in the unemployment rate have serious distributional consequences.2 It is the aim of this paper to provide a detailed discussion of how opening up to trade affects rent sharing and thereby the economy-wide distribution of profit and wage income as well as involuntary unemployment. A prerequisite for studying these effects is a model in which firms can make pure profits in equilibrium, and considering a unionized oligopoly seems promising in this respect as it relates the results to a well-established literature on rent sharing in an international trade context. On the other hand, the model should allow for economy-wide effects, and hence we have to embed the unionized oligopoly into a general equilibrium framework. Neary's (2009) general oligopolistic equilibrium (GOLE) model seems to be a suitable framework for this purpose. With a continuum of industries, a small and exogenous number of symmetric firms within each sector, Cournot competition between these firms, and labor as the only factor of production, it captures in a theoretically convincing way the intuitively appealing idea that firms are large and have market power in their own industry, but at the same time are small in the aggregate (and thus can rationally ignore their impact on economy-wide variables), without relying on the common approach of introducing a competitive outside sector that rules out, by construction, any general equilibrium feedback effects of labor market adjustments. Assuming in the GOLE model that industries differ in their technology and that all producers are confronted with wage claims of firm-level unions, we get a tractable theoretical framework, in which the interaction of industry-specific factors and rent sharing between firms and unions generate income inequality along multiple lines.3 In particular, the resulting framework features inter-group inequality between firm owners and workers as well as intra-group inequality within these two groups of agents, and, of course, involuntary unemployment.4 After introducing the main model ingredients, characterizing the closed economy equilibrium and shedding light on the role of unemployment compensation for aggregate employment, welfare and income distribution, we study in detail the consequences of a country's movement from autarky to free trade. To keep the analysis simple, we first look at trade between two fully symmetric countries, while the role of country asymmetries is addressed in an extension to this benchmark scenario. Thereby, we consider two forms of asymmetry, namely size and Ricardian technology differences. With respect to the role of country size differences, there is a presumption from previous work that trade effects are less pronounced in larger economies. We analyze whether such insights extend to a model in which both product and labor markets are imperfectly competitive. With respect to the role of Ricardian technology differences, we know from previous research that in an otherwise identical model with perfectly competitive goods and labor markets, trade leads to full specialization in the production of the two economies (see Dornbusch et al., 1977). This is no longer true if consumers are served by quantity-setting oligopolistically competitive producers. In this case, we can expect co-existence of domestic and foreign producers over a large subset of industries and, as pointed out by Neary (2009), either country's production even remains fully diversified in the open economy if the prevailing technology differences are not too large. This is the case we are focussing on in our paper, and we analyze within this full diversification framework how the insights from the benchmark model of identical countries have to be modified when allowing for technological dissimilarity. As a first result of our analysis, we find that trade exerts a union-disciplining effect and thus reduces union wage claims, similar to a partial equilibrium setting (see Huizinga, 1993 and Sørensen, 1993). The fall in union wage claims provides an employment stimulus which lowers involuntary unemployment and raises welfare. In the case of fully symmetric trading partners or countries that only differ in their market size, all firms are equally exposed to foreign competition despite prevailing differences in labor productivity across sectors, and the welfare stimulus arises from a proportional increase in output and thus consumption of all industrial goods. With Ricardian technology differences, the positive welfare effect is reinforced as countries (partially) specialize their production according to the law of comparative advantage, while employment declines in response to the relocation of economic activity. For high degrees of technological dissimilarity, this second-round employment reducing effect can be more pronounced than the initial employment stimulus of trade between symmetric countries, so that trade may aggravate the unemployment problem. However, this is not possible if technology differences are sufficiently small, so that trade between industrialized economies can be expected to have a positive employment effect—a result that seems to be well in line with empirical evidence (see Dutt et al., 2009 and Felbermayr et al., 2011). With respect to the outcome of rent sharing, we find that the average worker may gain or lose relative to the average firm owner, with the respective result depending crucially on the market power of producers. To be more specific, we show that, on average, firm owners gain relative to production workers if the market power of firms within their own industry is large. For instance, if the autarky equilibrium is characterized by a monopolistic or a duopolistic sectoral market structure, the ratio of average profits to average wages (the profit–wage ratio, in short) definitely goes up in the benchmark case of fully symmetric countries. Furthermore, we find that an increase in the profit–wage ratio is more likely if a country opens up for trade with a smaller trading partner, whereas Ricardian technology differences do not exert a clearcut effect on the profit–wage ratio. Aside from looking at the impact of trade on aggregate measures of rent sharing between firm owners and workers, we also study its impact on the distribution of income within these two groups of agents. In this respect, we show that the distribution of profit income across firm owners does not change in response to trade liberalization if the two countries are fully symmetric or only differ in size. The reason is that all firms are equally exposed to foreign competition and thus experience a proportional output increase in this case. Things are different if countries are technologically dissimilar. In particular, under the plausible assumption that countries have a comparative advantage in their high-productivity industries, they experience a more than proportional expansion of output and thus start exporting in those sectors, in which profits have already been high under autarky. This raises income inequality among firm owners.5 Regarding the impact of trade on income inequality among production workers, we can distinguish two principle sources of influence, namely changes in the wage differential and changes in the relative employment across industries. If countries are fully symmetric or only differ in their size, a movement from autarky to free trade does not affect the composition of workers across industries. However, it lowers the wage differential between sectors with differing productivity levels and therefore renders the distribution of wage income more equal in the open economy. Things are more complicated if we allow for technological dissimilarity of countries. While we are not able to identify a clearcut effect of technological dissimilarity on the distribution of wage income, insights from numerical simulation exercises indicate that if technological differences of countries are sufficiently pronounced trade does not necessarily lead to lower wage inequality. These results upon the impact of trade on the distribution of labor income contribute to a relatively new literature that addresses the consequences of trade for intra-group wage inequality (see, for instance, Egger and Kreickemeier, 2009, Egger and Kreickemeier, 2012, Helpman et al., 2010 and Davis and Harrigan, 2011). Existing studies to this literature point to self-selection of the most-productive firms into export status (and exit of the least productive ones) as a key rationale for explaining observations from both sides of the Atlantic that intra-group wage inequality not only accounts for a substantial part of overall wage inequality but also has significantly increased in recent years (see Katz and Autor, 1993, Barth and Lucifora, 2006 and Autor et al., 2008). This selection mechanism is well in line with two empirical regularities, namely the relevance of firm-specific factors for explaining wage inequality (see, for instance, Hildreth and Oswald, 1997 and Winter-Ebmer and Zweimüller, 1999) and the observation that exporters are more productive and pay higher wages than non-exporters (see Schank et al., 2007, and the literature cited there). However, by focussing on the differential impact that trade exerts on heterogeneous firms within an industry, existing models in this literature are not capable to explain the decline in the relevance of industry-specific factors for individual wage payments over the last few decades (Faggio et al., 2010). A rationale for the latter observation can be inferred from our analysis, which shows that given productivity differences between industries have a smaller impact on sectoral wage payments in an open economy if trade occurs between two countries that are not too different with respect to their production technologies. This suggests that the respective decline in the relevance of industry-specific factors for the wage distribution can at least be partially explained by the significant decline in trade costs over the same period. We can thus conclude that our results upon the impact of trade on intra-group inequality among production workers are complementary to those from the literature on heterogeneous firms within an industry and may therefore be helpful for drawing a comprehensive picture about the channels through which distributional effects of trade can materialize. The remainder of the paper is organized as follows. Section 2 describes the main model ingredients and sets up the theoretical framework. Section 3 characterizes the autarky equilibrium and provides insights on how changes in unemployment compensation affect the outcome in the closed economy. Section 4 considers trade between two fully symmetric countries and shows how the opening up to trade affects aggregate employment, welfare, the rent sharing between firm owners and workers as well as the distribution of income within these two groups of agents. In Section 5, we consider trade between two asymmetric countries. The last section concludes with a brief summary of the most important results.
نتیجه گیری انگلیسی
This paper presents a general oligopolistic equilibrium model with a unit mass of heterogeneous industries, a small number of identical quantity-setting firms in either sector and imperfect labor markets due to the existence of firm-level unions. In this framework, we investigate how a movement from autarky to free trade with a fully symmetric partner country affects the product and labor market outcome. In particular, we show that trade lowers the scope of unions for excessive wage claims, while firms increase their output levels in the open economy. Beyond that, we analyze how these adjustments at the firm level affect aggregate variables in the general equilibrium. Thereby, we show that an opening up to trade, by lowering union wage claims, raises economy-wide employment and welfare. Aside from this positive efficiency effect, access to international trade reduces income inequality among production workers, while it leaves income inequality among firm owners unaffected. Finally, the impact of trade on inter-group inequality between firm owners and production workers is not clearcut in general. On the one hand, product market competition is stimulated, while, on the other hand, unions lower their wage claims in the open economy. Which of these two counteracting effects dominates depends on the degree of product market competition. More specifically, we show that inter-group inequality increases in response to trade liberalization if not more than two domestic firms are active in either industry. In order to see to what extent the results from our analysis hinge on the assumption of two fully symmetric trading partners, we consider two forms of country asymmetries in an extension to our benchmark model. As a first source of asymmetry, we consider country size differences. In this respect, our model leads to the expected result that a smaller economy experiences larger effects from trade, as it gets access to a larger foreign market than an otherwise identical economy of larger size. However, pure country size differences do not affect the main results from our analysis in a qualitative way. As a second source of asymmetry, we consider Ricardian technology differences between the two trading partners, and we show that these differences may affect the results from our analysis in a qualitative way. To be more specific, by relocating production according to the law of comparative advantage, technologically dissimilar economies face an additional channel through which gains from trade materialize, implying that the welfare stimulus of trade identified in the setting with fully symmetric trading partners is reinforced if countries differ in their technology. However, the relocation of economic activity towards a country's comparative advantage industries lowers aggregate employment and this effect may be sufficiently strong to induce a total negative employment effect of trade if the technological dissimilarity is sufficiently pronounced. Finally, if countries relocate production towards their high-productivity industries, technological dissimilarity fosters income inequality among firm owners, while its impact on inter-group inequality between firm owners and workers and intra-group inequality among production workers turns out to be not clearcut in general. However, the distributional effects of trade between two technologically dissimilar countries indicate that trade uncouples the distribution of profits from the distribution of wages even though union wage setting leads to rent sharing in our setting. In the working paper version of this manuscript, we have extended the benchmark model in two further dimensions in order to check robustness of our results. In a first extension, we have given up the assumption of constant unemployment benefits and considered benefits that are proportional to the average wage rate as an alternative compensation scheme and, in a second one, we have looked at industry-level instead firm-level unions. Since these modifications do not affect the main results from our analysis in a significant way, we decided against presenting them in this paper. Another possible extension that may be worthwhile to consider in future research is the analysis of marginal trade liberalization. While there are of course different possibilities to model partial trade liberalization in our setting, assuming that just a subset of industries opens up for free trade would be a particularly attractive option from the perspective of analytical tractability. In a benchmark model without productivity differences across industries, it is immediate that profit and wage inequality vanish in the closed as well as the open economy with full trade liberalization. However, there is inequality in both of these dimensions for intermediate levels of trade liberalization, implying that an increase in the share of open sectors exerts a non-monotonic impact on intra-group inequality in this baseline scenario. Things are more complicated in a sophisticated model variant that allows for productivity differences across industries. In this case, the impact of marginal trade liberalization crucially depends on which sectors are newly exposed to international trade and no general result can be derived without an additional assumption regarding the sector ranking in the time line of globalization. Deriving more detailed results in this respect as well as extending the model in other possible directions is beyond the scope of this paper but may be a worthwhile task for future research.