Should trade unions welcome foreign investors? First evidence from Danish matched employer-employee data

While foreign direct investment (FDI) is widely believed to have an adverse effect on the bargaining power of unions and hence on union wages, little empirical research has been done to substantiate this conjecture. The present paper aims at filling this gap by analysing the effect of foreign ownership on the union wage premium in Denmark. Using matched employer-employee data, the positive effect of plant level unionisation on wages is found to vanish in foreign-owned firm.Collective bargaining foreign direct investment trade unions wages

Unionisation Structures, Productivity, and Firm Performance

This paper studies how different unionisation structures affect firm productivity, firm performance, and consumer welfare in a monopolistic competition model with heterogeneous firms and free entry. While centralised bargaining induces tougher selection among hetero- geneous producers and thus increases average productivity, firm-level bargaining allows less productive entrants to remain in the market. Centralised bargaining also results in higher average output and profit levels than either decentralised bargaining or a competitive labour market. From a welfare perspective, the choice between centralised and decentralised bar- gaining involves a potential trade-off between product variety and product prices. Extending the model to a two-country setup, I furthermore show that the positive effect of centralised bargaining on average productivity can be overturned when firms face international low-wage competition.Trade Unions, Productivity, Firm Performance, International Competition

Trade Liberalisation, Process and Product Innovation, and Relative Skill Demand

The interaction between trade liberalisation, product and process innovation, and relative skill demand is analysed in a model of international oligopoly. Lower trading barriers increase the degree of foreign competition. The competing enterprises respond by investing more aggressively in lowering marginal costs of production. Moreover, firms reduce the substitutability of their products through additional investment in product innovation. The paper also shows that the relative demand for skilled workers may increase as a result.Intra-industry Trade; Process Innovation; Product Innovation; Relative Skill Demand; Trade Liberalisation

Trade Liberalisation, Process and Product Innovation, and Relative Skill Demand

The interaction between trade liberalisation, product and process innovation, and relative skill demand is analysed in a model of international oligopoly. Lower trading barriers increase the degree of foreign competition. The competing enterprises respond by investing more aggressively in lowering marginal costs of production. Moreover, firms reduce the substitutability of their products through additional investment in product innovation. The paper also shows that the relative demand for skilled workers may increase as a result.Intra-industry trade, process innovation, product innovation, relative skill demand, trade liberalisation

Core Labour Standards and FDI: Friends or Foes? The Case of Child Labour

We test the often-cited hypothesis that high levels of child labour attract foreign investors. Using panel data we show the overall effect, which child labour has on foreign direct investment (FDI), to be a (small) negative one. We find strong evidence for the theoretical prediction that child labour deters FDI by slowing down economic development. Weaker evidence is provided for our theoretical prediction that child labour can discourage FDI via its impact on the availability of a skilled labour force in an economy. The data do not indicate that high levels of child labour drive down the factor share of labour, thereby increasing the attractiveness of an economy for foreign investors.child labour, FDI, core labour standards

Foreign Competition, Multinational Firms, and the Effects of One-Sided Wage Rigidity

The paper studies the effects of a one-sided minimum wage in a two-country model of intra-industry trade, in which multinational firms arise endogenously. With positive levels of intra-industry trade the adverse employment and welfare effects of an asymmetric minimum wage are significantly larger than in a non-trading economy. Multinational firms generally mitigate the effect somewhat. Even though factor prices are not equalised across countries, a (binding) wage floor in one country will prop up wages in the other. The flexible wage country is insulated from shocks caused by factor accumulation in the rigid wage country, while an increase in the labour supply of the latter economy may have profound impacts on labour market outcomes in both countries.Intra-Industry trade, wage rigidity, multinational firms, unemployment

A polyhedral approach to computing border bases

Border bases can be considered to be the natural extension of Gr\"obner bases that have several advantages. Unfortunately, to date the classical border basis algorithm relies on (degree-compatible) term orderings and implicitly on reduced Gr\"obner bases. We adapt the classical border basis algorithm to allow for calculating border bases for arbitrary degree-compatible order ideals, which is \emph{independent} from term orderings. Moreover, the algorithm also supports calculating degree-compatible order ideals with \emph{preference} on contained elements, even though finding a preferred order ideal is NP-hard. Effectively we retain degree-compatibility only to successively extend our computation degree-by-degree. The adaptation is based on our polyhedral characterization: order ideals that support a border basis correspond one-to-one to integral points of the order ideal polytope. This establishes a crucial connection between the ideal and the combinatorial structure of the associated factor spaces

A Kinematic Measurement of Ram Pressure in the Outer Disk of Regular Galaxies

While most ram pressure studies have focused on ram pressure stripping in galaxy clusters, we devise a novel approach based on a kinematic measurement of ram pressure perturbations in HI velocity fields for intergalactic material (IGM) densities and relative velocities that are one to two orders of magnitude lower than in galaxies showing ram pressure stripping. Our model evaluates ram pressure induced kinematic terms in gas disks with constant inclination as well as those with a warped geometry. Ram pressure perturbations are characterized by kinematic modes of even order, m=0 and m=2, corresponding to a ram wind perpendicular and parallel to the gas disk, respectively. Long-term consequences of ram pressure, such as warped disks as well as uncertainties in the disk geometry typically generate uneven modes (m=1 and m=3), that are clearly distinguishable from the kinematic ram pressure terms. We have applied our models to three nearby isolated galaxies, utilizing Markov Chain Monte Carlo fitting routines to determine ram pressure perturbations in the velocity fields of NGC 6946 and NGC 3621 of ~30km s$^{-1}$ (effective line-of-sight velocity change) at HI column densities below (4-10)$\times$10$^{20}$cm$^{-2}$ (at radial scales greater than ~15kpc). In contrast, NGC 628 is dominated by a strongly warped disk. Our model fits reveal the three-dimensional vector of the galaxies' movement with respect to the IGM rest-frame and provide constraints on the product of speed with IGM density, opening a new window for extragalactic velocity measurements and studies of the intergalactic medium.Comment: 34 pages, 28 figures, accepted for publication in MNRA

The matching polytope does not admit fully-polynomial size relaxation schemes

The groundbreaking work of Rothvo{\ss} [arxiv:1311.2369] established that every linear program expressing the matching polytope has an exponential number of inequalities (formally, the matching polytope has exponential extension complexity). We generalize this result by deriving strong bounds on the polyhedral inapproximability of the matching polytope: for fixed $0 < \varepsilon < 1$, every polyhedral $(1 + \varepsilon / n)$-approximation requires an exponential number of inequalities, where $n$ is the number of vertices. This is sharp given the well-known $\rho$-approximation of size $O(\binom{n}{\rho/(\rho-1)})$ provided by the odd-sets of size up to $\rho/(\rho-1)$. Thus matching is the first problem in $P$, whose natural linear encoding does not admit a fully polynomial-size relaxation scheme (the polyhedral equivalent of an FPTAS), which provides a sharp separation from the polynomial-size relaxation scheme obtained e.g., via constant-sized odd-sets mentioned above. Our approach reuses ideas from Rothvo{\ss} [arxiv:1311.2369], however the main lower bounding technique is different. While the original proof is based on the hyperplane separation bound (also called the rectangle corruption bound), we employ the information-theoretic notion of common information as introduced in Braun and Pokutta [http://eccc.hpi-web.de/report/2013/056/], which allows to analyze perturbations of slack matrices. It turns out that the high extension complexity for the matching polytope stem from the same source of hardness as for the correlation polytope: a direct sum structure.Comment: 21 pages, 3 figure