Title
Labor-Management Bargaining, Labor Standards and International Rivalry
Abstract
Using the labor union's bargaining power as an indication of government policy on labor
standards issues, we analyze the competition between a domestic (North) firm and a foreign
(South) firm, and their relationship with optimal labor standards (LS). First, we show that
the optimal level of LS is higher when labor unions are employment-oriented than when
they are not. Second, it is higher under free trade than under the optimal tariff system if
labor unions are employment-oriented. Third, 'a race to the bottom' of LS occurs in the
case of wage-oriented unions. Fourth, the North's imposing a tariff to force the Southern
government to raise its LS is effective only if the Southern union is wage-oriented. In order
to raise Southern LS, both countries may need some deeper form of economic integration,
if the North does not want to abandon its free trade system.
Jung HUR
College of Economics, Sogan University, Seoul, Korea
Laixun ZHAO
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501
Japan
Phone: (81) 78 803 7036
Fax: (81) 78 803 7059