Price and Wage Setting in an Integrating Europe: Firm Level Evidence

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Statement of purpose:The purpose of these working papers is to promote the circulation of research results (Research Series) and analytical studies (Documents Series) made within the National Bank of Belgium or presented by external economists in seminars, conferences and conventions organised by the Bank. The aim is therefore to provide a platform for discussion. The opinions expressed are strictly those of the authors and do not necessarily reflect the views of the National Bank of Belgium. AbstractEurope has witnessed the last decade an accelerated process of economic integration. Trade barriers were removed, the euro was introduced and ten new member states entered the European Union. Economic integration is likely to have an impact on both labor and product markets. Unlike most other papers, that focus on product and labor markets separately, we look at the link between globalization and product and labor market imperfections simultaneously. To this end, we rely on a rich panel of manufacturing firms in Belgium, a small open economy. We find that union bargaining power is higher in sectors characterized by high price cost margins. Moreover, ignoring imperfections on the labor market, leads to an underestimation of product market power.Concerning the influence of globalization, our main findings are that both price cost margins and union bargaining power are typically lower in sectors that are subject higher international competition. This result is especially true for competition from low wage countries. JEL-code : F16, J50, L13.

The Distribution of Monopolistic Markups in the Polish Economy

“…The impact of competition on markups was analyzed by eg. Abraham et al (2006) for Belgium, Boulhol (2004) for OECD countries, and Lundin (2004) for Sweden. Some studies explore the effects of changes in the institutional environment.…”

The Distribution of Monopolistic Markups in the Polish Economy

“…The impact of competition on markups was analysed by eg. Boulhol (2004) for OECD countries, Lundin (2004) for Sweden, Abraham et al, (2006) for Belgium. Some papers explore the effects of changes in the institutional environment.…”

The impact of globalisation on the euro area macroeconomy

“…All in all, it appears that the aggregate economy impact has been muted -indeed, on aggregate price-cost markups have grown given the importance of other domestic factors (see Boulhol, 2004). Abraham et al (2006), relying on microeconomic data for Belgium, find that price-cost margins are typically lower in sectors that are subject to higher international competition (especially from low-wage countries). instance, Rogoff, 2006or Ball, 2006.…”