This document examines foreign direct investment (FDI) when multinationals and labour unions bargain over labour contracts and lobby the self-interested government for taxation and labour market regulation. We demonstrate that right-to-manage bargaining predicts higher returns for FDI than does...

The paper contributes to the globalization debate by scrutinizing the international spillover effects which are provoked if a single country reduces the generosity of the unemployment compensation system or weakens labor union power. For this purpose a two-country model with imperfect...

Governments the world over offer significant inducements to attract inward investment, motivated by the expectation of spillover benefits to augment the primary benefits of a boost to national income from new investment. This paper begins by reviewing possible sources of FDI induced spillovers....

While there has been a large empirical literature on productivity spillovers from foreign to domestic firms this literature treats the channels through which these spillover effects work as a black box. This paper attempts to fill this gap in the literature. Our results suggest that firms which...

This paper examines how employment protection legislation affects location decisions of multinationals. Based on a simple theoretical framework, we estimate an empirical model, using OECD-data on bilateral FDI-flows and employment protection indices. We find that, while an ?unfavourable?...

From a theoretical viewpoint the relationship between foreign ownership and unionization is ambiguous. On the one hand, foreign owners have better opportunities to undermine workers' unionization. On the other hand, workers of foreign-owned firms have an increased demand for the protection...

This chapter reviews research on the linkages between corporate globalization and worker representation. Studies have identified various transmission channels through which the activities of foreign multinational companies (MNCs) affect host-country institutions of union and non-union...

We study employment, employee effort, wages and profit sharing when firms face stochastic revenue shocks and when base wages and profit shares are determined through negotiations. The negotiated profit share depends positively on the relative bargaining power of the trade union and it has...

Multinational labor demand responds to wage differentials at the extensive margin, when a multinational enterprise (MNE) expands into foreign locations, and at the intensive margin, when an MNE operates existing affiliates across locations. We derive conditions for parametric and nonparametric...

We show that a stronger earnings relationship of unemployment compensation reduces wages and increases employment in an economy in which wages are determined by a trade union that maximises the rent from unionisation. The opposite result applies for a utilitarian union. Using manufacturing and...