Économie et Statistique n° 363-364-365 - Firms on The Global Markets Labour Market - Attractiveness - Debt - Enlargement toward East en South
Trade and the labour market in imperfect competition
What role do profits (or rents) play in how trade affects the labour market? How can this role be understood in theory and how can it be measured empirically? Economic papers on trade openness, rent distribution and wage adjustment has been particularly interested in the imports variable. Yet exports should also contribute to the openness since they can also generate rent. Based on the assumption of efficient contracts between unions and employers and the assumption of an international segmentation of markets, we show that real wages can be expressed as a linear combination of market shares gained by selling abroad and on the domestic market. The effect of these market shares on wages is thought to depend jointly on the power of the unions and the state of competition on each of the export markets. If the two conditions of 1) the power of the firms on the goods market (ability to make profits) and 2) the presence of union power on the labour market (to share the profits) are confirmed, then the increase in market share goes hand in hand with an increase in wages. This theoretical equation provides a direct sector-level test of whether these two conditions are present. The findings show export-derived rents shared with employees in half of the developed countries' sectors.