Interpreting Wage Bargaining Norms
AbstractFrom the mid-1990s onwards, Swedish wage bargaining has been characterised by informal co-ordination of the wage claims of big unions and bargaining cartels. In particular, it has been understood that the manufacturing sector should lead by first agreeing on a pay increase, whereafter the service sector and public sector unions choose a similar increase. We analyse his setup with two possible theoretical interpretations: (i) the manufacturing sector as a tackelberg leader and (ii) a normative role for the manufacturing sector’s pay increase, upported either by unmodelled social pressure or a modeled loss aversion (envy) of the heltered sector unions. The conclusion of the analysis is that the normative or leading role of one sector – in the Swedish case the manufacturing sector – can potentially bring big benefits for employment and output. Generalising an idea suggested by Lars Calmfors and Anna Larsson, our analysis also generates a rudimentary theory of why the wage increase norm sometimes binds and sometimes not. A comparison of the model predictions and the observed outcomes of the last five wage bargaining rounds in Sweden suggests that the model is generally consistent with the empirical observations: wage moderation and norm observance are stronger when the manufacturing industry’s initial relative wage is low.
Download InfoIf 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.
Bibliographic InfoPaper provided by National Institute of Economic Research in its series Working Paper with number 116.
Length: 39 pages
Date of creation: 01 Feb 2010
Date of revision:
Contact details of provider:
Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden
Phone: 46-(0)8-453 59 00
Fax: 46-(0)8-453 59 80
Web page: http://www.konj.se/
More information through EDIRC
wage bargaining; bargaining co-ordination;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
This paper has been announced in the following NEP Reports:
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.:
- Ahlroth, Sofia & Bjorklund, Anders & Forslund, Anders, 1997. "The Output of the Swedish Education Sector," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 43(1), pages 89-104, March.
- Arai, Mahmood & Heyman, Fredrik, 2000. "Permanent and Temporary Labour: Job and Worker Flows in Sweden, 1989-1998," Working Paper 71, National Institute of Economic Research.
- Gren, Ing-Marie, 2003. "Monetary Green Accounting and Ecosystem Services," Working Paper 86, National Institute of Economic Research.
- Eriksson, Kimmo & Karlander, Johan & Öller, Lars-Erik, 1996.
"Hierarchical Assignments: Stability and Fairness,"
50, National Institute of Economic Research.
- Huhtala, Anni & Samakovlis, Eva, 2003. "Green Accounting, Air Pollution and Health," Working Paper 82, National Institute of Economic Research.
- Öller, Lars-Erik & Barot, Bharat, 1999. "Comparing the Accuracy of European GDP Forecasts," Working Paper 64, National Institute of Economic Research.
- Barot, Bharat & Yang, Zan, 2002. "House Prices and Housing Investment in Sweden and the United Kingdom: Econometric Analysis for the Period 1970-1998," Working Paper 80, National Institute of Economic Research.
- Lars Calmfors & Anna Larsson, 2011.
"Pattern Bargaining and Wage Leadership in a Small Open Economy,"
CESifo Working Paper Series
3510, CESifo Group Munich.
- Lars Calmfors & Anna Larsson Seim, 2013. "Pattern Bargaining and Wage Leadership in a Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(1), pages 109-140, 01.
- Calmfors, Lars & Larsson, Anna, 2009. "Pattern Bargaining and Wage Leadership in a Small Open Economy," Seminar Papers 760, Stockholm University, Institute for International Economic Studies.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Henrik Hellström).
If references are entirely missing, you can add them using this form.