UNION WAGE SENSITIVITY TO TRADE AND PROTECTION - THEORY AND EVIDENCE

We develop a model featuring union-firm bargaining, strategic rivalry between the unionized domestic firm and its foreign competitor, and en dogenous protection. The model frames a micro-level empirical study of the role of trade and trade policy in union wage determination. The r esults indicate that (1) trade flows and trade policy influence wages as much as the domestic factors usually considered, (2) imports and ta riffs are negatively correlated with wages, and (3) there is little ev idence of the trade flows endogeneity suggested by strategic trade the ory or the tariff endogeneity that could explain the negative tariff c oefficient.