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We investigate the impact of exchange rate movements on wage determination in unionised labour markets. Using a simple model of international oligopoly, we show that organised labour has a rational incentive to accept lower wages in the face of a currency appreciation. This proposition is...
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In the presence of rigid prices, movements in the exchange rate help to absorb external shocks and to reduce changes in net exports. However, they also affect firms’ competitiveness, marginal costs, and labor demand. In countries where labor market institutions hinder wage adjustment (for...
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We characterize the dilemma of one currency area: the common currency’s value is overvalued for regions with poor fundamentals, which hampers export. With labour market rigidity, they cannot reduce labour costs to restore its growth, leading to further reduction of exports. Using Chinese...
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that exchange rate fluctuations have significant long-term effects on the labour input of Canada's manufacturing industries …
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Canada's manufacturing industries. The analysis is based on a dynamic model of labour demand and the econometric strategy …, from Statistics Canada's KLEMS database, and covers a long sample that includes two full cycles of appreciation and … significant effects on the labour choices of Canada's manufacturing employers, and that these effects are stronger for industries …
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