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Centralized Bargaining, Multi-Tasking and Work Incentives

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  • Lindbeck, Assar

    ()
    (Institute for International Economic Studies, Stockholm University)

  • Snower, Dennis J.

    ()
    (Department of Economics, Birkbeck College)

Abstract

The paper examines the implications of an important aspect of the ongoing reorganization of work - the move from occupational specialization toward multi-tasking - for centralized wage bargaining. The analysis shows how, on account of this reorganization, centralized bargaining becomes increasingly nefficient and detrimental to firms’ profit opportunities, since it prevents firms from offering their employees adequate incentives to perform the appropriate mix of tasks. The paper also shows how centralized bargaining inhibits firms from using wages to induce workers to learn how to use their experience from one set of tasks to enhance their performance at other tasks. In this way, the paper helps explain the increasing resistance to centralized bargaining in various advanced market economies.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 620.

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Length: 11 pages
Date of creation: 30 Oct 1997
Date of revision:
Handle: RePEc:hhs:iiessp:0620

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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Keywords: Centralized wage bargaining; restructuring; organization of firms; technological change; information flows; employment; wage formation; unemployment;

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References

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  1. Gary S. Becker & Kevin M. Murphy, 1994. "The Division of Labor, Coordination Costs, and Knowledge," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 299-322 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Dennis J. Snower, 1998. "Causes of changing earnings inequality," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 69-133.
  2. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
  3. Snower, Dennis J., 1999. "Inequality of Earnings," CEPR Discussion Papers 2321, C.E.P.R. Discussion Papers.
  4. Floro Ernesto Caroleo, 2000. "Le politiche per l'occupazione in Europa: una tassonomia istituzionale," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2000(71).
  5. Norbert Berthold & Rainer Fehn, 2003. "Unemployment in Germany: Reasons and Remedies," CESifo Working Paper Series 871, CESifo Group Munich.
  6. Ansgar Belke & Bernhard Herz & Lukas Vogel, 2007. "Reforms, Exchange Rates and Monetary Commitment: A Panel Analysis for OECD Countries," Open Economies Review, Springer, vol. 18(3), pages 369-388, July.

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