Foreign firms drive down wages and increase unemployment in global markets.
The article explores how wage negotiations affect where companies choose to set up shop in foreign markets. By analyzing how firms can use foreign production facilities to negotiate better wages with local unions, the study shows that the balance of power between companies and unions determines the presence of multinational and exporting firms. The research reveals how wages and unemployment rates change with economic integration, both in the short and long term. This helps predict how globalization can impact domestic job markets.