Hibbs Jr., Douglas A. (Department of Economics, School of Economics and Commercial Law, Göteborg University) Locking, Håkan (Department of Management and Economics, Växjö University)
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The effects of wage dispersion on productive efficiency is a topic rich in theoretical conjecture, a common object of Scandinavian polemical debate and at the same time an issue almost barren of systematic econometric evidence. The Swedish record of enormous compression of relative wages under the institutional regime of centralized solidarity bargaining, followed by substantial de-compression of wages after central bargaining broke down, supplies observations well suited for empirical testing of theories and assertions about the response of productive efficiency to shifts in wage distribution. Results presented in this paper obtained from regression experiments based on distribution-augmented production and labor productivity functions yield no support of 'fairness, morale and cohesiveness' theories implying that wage leveling within workplaces and industries may enhance productivity. We do find substantial evidence, however, that reduction of inter-industry wage differentials contributed positively to aggregate output and productivity growth, most likely for the structural reasons first emphasized by leading Swedish trade union economists almost a half century ago.
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Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number
21.
Length: 36 pages Date of creation: 24 Jan 2000 Date of revision: Publication status: Published in Journal of Labor Economics, 2000, pages 755-783. Handle: RePEc:hhs:gunwpe:0021
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden Phone: 031-773 10 00 Web page: http://www.handels.gu.se/econ/ More information through EDIRC
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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.:
Moene, Karl Ove & Wallerstein, Michael, 1997.
"Pay Inequality,"
Journal of Labor Economics,
University of Chicago Press, vol. 15(3), pages 403-30, July.
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