Date of this Version


Document Type

Journal Article

Publication Details

Gaston, Noel. Discussion Paper No. 495. Unions and the decetnralisation of collective bargaining in a globalising world, January 2000, The institute of Social and Economic Research, Osaka University, 25pp.

Copyright © Noel Gaston, 2000.

Acknowledgment to Institute of Social and Economic Research, Osaka University.


An interesting finding of recent research is that strategic considerations and collective bargaining structures often influence foreign direct investment. In this paper, I argue that the support for the decentralisation of collective bargaining may be an optimal response by unions to the growing global nature of the firms that employ their members. I show that unions prefer a more wage-oriented bargaining posture if their members are faced with a stronger outsourcing threat. The model is able to rationalise the empirically insignificant effects of outsourcing on wages. The findings are also consistent with the growing wage inequality and falling union membership that some countries have experienced since implementing more decentralised forms of wage bargaining.