Abstract

We try to answer the following questions: Why do firms reorganize? Which are the determinants of innovation on the level of the firm? Can local labor supply shocks (e.g. in terms of low-skill immigration) explain these technological and organizational changes? What role plays international trade and can increased competition due to higher exposure to trade with low-wage countries explain the willingness of firms to leave union agreements? We deal with these questions by developing a theoretical model of the interdependence of international trade, technological change and deunionization. The model is tested empirically using matched employer-employee panel data. The data set is created by combining the IAB establishment survey with the register data of the German Agency for Labor.