Exchange Rates and Wages in Unionised Labour Markets

24 Pages Posted: 7 Jun 2010

See all articles by Paulo Bastos

Paulo Bastos

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE); ISEG Lisbon School of Economics and Management,Universidade de Lisboa

Peter W Wright

University of Sheffield - Department of Economics

Date Written: June 7, 2010

Abstract

We investigate the impact of exchange rate movements on wage determination in unionised labour markets. Using a simple model of international oligopoly, we show that organised labour has a rational incentive to accept lower wages in the face of a currency appreciation. This proposition is examined empirically using a matched worker-firm dataset for Portugal. We find results consistent with the predictions of the model, though the impact varies considerably with both worker characteristics and the regional unemployment rate.

Keywords: Exchange Rates, Trade Unions, Wage Bargaining, Worker-Firm Data

JEL Classification: F31, J3, J5

Suggested Citation

Bastos, Paulo and Wright, Peter W, Exchange Rates and Wages in Unionised Labour Markets (June 7, 2010). Available at SSRN: https://ssrn.com/abstract=1621699 or http://dx.doi.org/10.2139/ssrn.1621699

Paulo Bastos

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE) ( email )

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal

ISEG Lisbon School of Economics and Management,Universidade de Lisboa ( email )

Rua do Quelhas 6
LISBOA, 1200-781
Portugal

Peter W Wright (Contact Author)

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
UNITED KINGDOM

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