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The rise and fall of centralized wage bargaining

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  • Salvador Ortigueira

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Abstract

During the three decades spanning the early 50’s to the early 80’s, the wagesetting process in most Northern European countries was dominated by centralized bargaining, where peak level labor and employer associations set wages nationwide. In the early 80’s centralized wage bargaining began to collapse. In this paper we assess a novel explanation both for the initial establishment of a centralized wagesetting process, and for its subsequent collapse. According to our theory, centralized wage bargaining was set up as a response to the spillovers created by the unemployment benefit program. Its collapse was the result of the increase in the productivity gap across workers, brought about by equipment-specific technological progress and equipment-skill complementarit

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Bibliographic Info

Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we1129.

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Date of creation: Aug 2011
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Handle: RePEc:cte:werepe:we1129

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Keywords: Wage-Bargaining Arrangements; Unemployment Benefits; Equipment-Specific Technological Progress; Equipment-Skill Complementarity;

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  1. Cukierman, A. & Lippi, F., 1999. "Labor markets and Monetary Union: A Strategic Analysis," Discussion Paper, Tilburg University, Center for Economic Research 1999-100, Tilburg University, Center for Economic Research.
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Cited by:
  1. Hirsch, Boris & Merkl, Christian & Mueller, Steffen & Schnabel, Claus, 2014. "Centralized vs. decentralized wage formation: The role of firms' production technology," Discussion Papers, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics 92, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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