Advanced Search
MyIDEAS: Login to save this paper or follow this series

Real and Nominal Wage Adjustment in Open Economies

Contents:

Author Info

  • Anders Forslund
  • Nils Gottfries
  • Andreas Westermark

Abstract

How are wages set in an open economy? What role is played by demand pressure, international competition, and structural factors in the labour market? How important is nominal wage rigidity and exchange rate policy for the evolution of real wages and competitiveness? To answer these questions, we formulate a theoretical model of wage bargaining in an open economy and use it to derive a simple wage equation where all parameters have clear economic interpretations. We estimate the wage equation on data for aggregate manufacturing wages in Denmark, Finland, Norway, and Sweden from the mid 1960s to the mid 1990s.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2006/wp-cesifo-2006-01/cesifo1_wp1649.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1649.

as in new window
Length:
Date of creation: 2006
Date of revision:
Handle: RePEc:ces:ceswps:_1649

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: wage formation; efficiency wage; turnover; bargaining; rent sharing; nominal wage rigidity; exchange rate policy; competitiveness;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Stefan Eriksson, 2006. "Skill Loss, Ranking of Job Applicants and the Dynamics of Unemployment," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 7, pages 265-296, 08.
  2. Eriksson, Stefan, 2002. "Imperfect information, wage formation, and the employability of the unemployed," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2002:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  3. Holden, S., 1988. "Wage Bargaining And Efficiency Wages: Some Implications For Tests Of Trade Union Models," Memorandum, Oslo University, Department of Economics 11/1988, Oslo University, Department of Economics.
  4. Holden, Steinar & Nymoen, Ragnar, 2002. " Measuring Structural Unemployment: NAWRU Estimates in the Nordic Countries," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 104(1), pages 87-104.
  5. Steinar Holden, 2002. "The Costs of Price Stability - Downward Nominal Wage Rigidity in Europe," NBER Working Papers 8865, National Bureau of Economic Research, Inc.
  6. Holmlund, B., 1997. "Unemployment Insurance in Theory and Practice," Papers, Uppsala - Working Paper Series 1997-25, Uppsala - Working Paper Series.
  7. Blanchflower, D. & Oswald, A., 1989. "The Wage Curve," Papers, London School of Economics - Centre for Labour Economics 340, London School of Economics - Centre for Labour Economics.
  8. Nymoen, Ragnar & Rodseth, Asbjorn, 2003. "Explaining unemployment: some lessons from Nordic wage formation," Labour Economics, Elsevier, Elsevier, vol. 10(1), pages 1-29, February.
  9. Corrado Benassi & Antonello E. Scorcu, 2003. "Indexation Rules, Risk Aversion and Imperfect Information," Manchester School, University of Manchester, University of Manchester, vol. 71(3), pages 330-340, 06.
  10. N. Gregory Mankiw & Ricardo Reis, 2002. "Sticky Information Versus Sticky Prices: A Proposal To Replace The New Keynesian Phillips Curve," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 117(4), pages 1295-1328, November.
  11. Ozkan, F. Gulcin & Sutherland, Alan, 1998. "A currency crisis model with an optimising policymaker," Journal of International Economics, Elsevier, Elsevier, vol. 44(2), pages 339-364, April.
  12. Edin, Per-Anders & Vredin, Anders, 1993. "Devaluation Risk in Target Zones: Evidence from the Nordic Countries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(416), pages 161-75, January.
  13. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(3), pages 1273-1319, September.
  14. Olivier Jean Blanchard & Lawrence Katz, 1999. "Wage Dynamics: Reconciling Theory and Evidence," NBER Working Papers 6924, National Bureau of Economic Research, Inc.
  15. Olivier Jean Blanchard, 1991. "Wage Bargaining and Unemployment Persistence," NBER Working Papers 3664, National Bureau of Economic Research, Inc.
  16. Bertil Holmlund, 2003. "The Rise and Fall of Swedish Unemployment," CESifo Working Paper Series 918, CESifo Group Munich.
  17. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Goods Prices and Exchange Rates: What Have We Learned?," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(3), pages 1243-1272, September.
  18. Calmfors, Lars & Forslund, Anders, 1991. "Real-Wage Determination and Labour Market Policies: The Swedish Experience," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(408), pages 1130-48, September.
  19. Johansen, Kare, 1995. "Norwegian Wage Curves," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 57(2), pages 229-47, May.
  20. Eriksson, Stefan & Gottfries, Nils, 2000. "Ranking of Job Applicants, On-the-job Search and Persistent Unemployment," Working Paper Series, Uppsala University, Department of Economics 2000:3, Uppsala University, Department of Economics.
  21. Forslund, Anders & Kolm, Ann-Sofie, 2000. "Active labour market policies and real-wage determination - Swedish evidence," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2000:7, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  22. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 87(2), pages 160-93.
  23. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 1998. "Monetary Policy Shocks: What Have We Learned and to What End?," NBER Working Papers 6400, National Bureau of Economic Research, Inc.
  24. Gottfries, Nils & Persson, Torsten, 1988. "Empirical Examinations of the Information Sets of Economic Agents," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 103(1), pages 251-59, February.
  25. Manning, Alan, 1993. "Wage Bargaining and the Phillips Curve: The Identification and Specification of Aggregate Wage Equations," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 103(416), pages 98-118, January.
  26. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199279173, October.
  27. Blanchard, Olivier Jean, 1989. "A Traditional Interpretation of Macroeconomic Fluctuations," American Economic Review, American Economic Association, American Economic Association, vol. 79(5), pages 1146-64, December.
  28. Bardsen, Gunnar & Eitrheim, Oyvind & Jansen, Eilev S. & Nymoen, Ragnar, 2005. "The Econometrics of Macroeconomic Modelling," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199246502, October.
  29. Gottfries, Nils & Westermark, Andreas, 1998. "Nominal wage contracts and the persistent effects of monetary policy," European Economic Review, Elsevier, Elsevier, vol. 42(2), pages 207-223, February.
  30. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 32(2), pages 573-619, June.
  31. Holm, Pasi & Honkapohja, Seppo & Koskela, Erkki, 1994. "A monopoly-union model of wage determination with capital and taxes: An empirical application to the Finnish manufacturing," European Economic Review, Elsevier, Elsevier, vol. 38(2), pages 285-303, February.
  32. Holmlund, B. & Kolm, A.S., 1995. "Progressive Taxation, Wage Setting, and Unemployment , Theory and Swedish Evidence," Papers, Uppsala - Working Paper Series 1995-15, Uppsala - Working Paper Series.
  33. Mikael Carlsson, 2003. "Measures of Technology and the Short-run Response to Technology Shocks," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 105(4), pages 555-579, December.
  34. Calmfors, L. & Nymoen, R., 1990. "Real Wage Adjustment And Employment Policies In The Nordic Countries," Papers, Stockholm - International Economic Studies 461, Stockholm - International Economic Studies.
  35. Richard Layard & Stephen Nickell, 1998. "Labour Market Institutions and Economic Performance," CEP Discussion Papers, Centre for Economic Performance, LSE dp0407, Centre for Economic Performance, LSE.
  36. Hersoug, Tor & Kjaer, Knut N & Rodseth, Asbjorn, 1986. "Wages, Taxes and the Utility-Maximizing Trade Union: A Confrontationwith Norwegian Data," Oxford Economic Papers, Oxford University Press, vol. 38(3), pages 403-23, November.
  37. Holden, Steinar, 1994. "Wage bargaining and nominal rigidities," European Economic Review, Elsevier, Elsevier, vol. 38(5), pages 1021-1039, May.
  38. Lockwood, Ben & Manning, Alan, 1993. "Wage setting and the tax system theory and evidence for the United Kingdom," Journal of Public Economics, Elsevier, Elsevier, vol. 52(1), pages 1-29, August.
  39. Nymoen, Ragnar, 1989. "Modelling Wages in the Small Open Economy: An Error-Correction Model of Norwegian Manufacturing Wages," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 51(3), pages 239-58, August.
  40. Horn, Henrik & Persson, Torsten, 1988. "Exchange rate policy, wage formation and credibility," European Economic Review, Elsevier, Elsevier, vol. 32(8), pages 1621-1636, October.
  41. Stock, James H & Watson, Mark W, 1988. "Variable Trends in Economic Time Series," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 2(3), pages 147-74, Summer.
  42. Layard, Richard & Nickell, Stephen, 1986. "Unemployment in Britain," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 53(210(S)), pages S121-69, Supplemen.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_1649. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.