TD n. 619 2014
Gustavo Gonzaga, Beatriz Cristina Muriel Hernández, Cristina Terra.
We build a theoretical model that incorporates unionization in the
labor market into a Heckscher-Ohlin-Samuelson (HOS) framework to in-
vestigate the impact of unionization on the Stolper-Samuelson Theorem.
To capture the American economy case, we assume that unskilled labor in
the manufactured goods sector is unionized, and that sector is intensive
in skilled labor, and that trade liberalization increases the relative price
of manufactured goods. In the HOS model, trade liberalization induces
a reallocation of production towards the sector that uses intensively the
country's most abundant factor. The resulting change in relative labor de-
mand impacts wage bargaining in the unionized sector, which, in turn, has
a dampening e ect on the Stolper-Samuelson e ect. Moreover, wages of
unionized workers are even less responsive to trade liberalization. Through
traditional mandated-wages regressions, we show that skilled-wage di er-
entials changes were less pronounced among more unionized sectors in the
U.S. economy for the 1979-1990 period.
