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Centralized Bargaining, Multi-Tasking, and Work Incentives

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  • Lindbeck, Assar

    ()
    (Research Institute of Industrial Economics (IFN))

  • Snower, Dennis J.

    (Birkbeck College, University of London)

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    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 inefficient 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 Research Institute of Industrial Economics in its series Working Paper Series with number 473.

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    Length: 42 pages
    Date of creation: 28 Dec 2012
    Date of revision:
    Handle: RePEc:hhs:iuiwop:0473

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    Keywords: Centralized wage bargaining; restructuring; organization of firms; technological change; information flows; employment; wage formation; unemployment;

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