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The Costs and Benefits of Various Wage Bargaining Structures

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  • Alun H. Thomas
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    Abstract

    The literature on the relationship between the unemployment rate and wage bargaining fails to separate the offsetting effects of a reduction in competition associated with centralized bargaining and the increased awareness of unemployment externalities. This paper uses OECD data to distinguish these effects. While wages have become more sensitive to changes in the unemployment rate in countries that have switched to centralized wage-bargaining arrangements, the industry wage is not particularly sensitive to internal factors (relative price and productivity shifts) in economies with centralized/industry-level bargaining arrangements. The latter effect dominates in terms of persistently high unemployment and weaker growth.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/71.

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    Length: 35
    Date of creation: 01 Apr 2002
    Date of revision:
    Handle: RePEc:imf:imfwpa:02/71

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    Related research

    Keywords: Wage bargaining; Unemployment; wage; bargaining; wages; unemployment rate; social security; negotiations; wage determination; wage costs; unemployment rates; benefits; wage equations; wage differentiation; social security taxes; wage increases; wage structure; wage adjustment; wage structures; wage restraint; wage level; payroll; worker; wage indexation; wage policy; shadow wage; wage cost; wage equation; labor income; welfare state; compensation; wage rate; social security tax; wage settlements; male wage;

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    1. Nickell, S. & Wadhwani, S., 1989. "Insider Forces And Wage Determination," Economics Series Working Papers 9972, University of Oxford, Department of Economics.
    2. Cukierman, Alex & Lippi, Francesco, 1999. "Central bank independence, centralization of wage bargaining, inflation and unemployment:: Theory and some evidence," European Economic Review, Elsevier, vol. 43(7), pages 1395-1434, June.
    3. Henrekson, Magnus & Davis, Steven J., 2000. "Wage-Setting Institutions as Industrial Policy," Working Paper Series 529, Research Institute of Industrial Economics.
    4. repec:fth:iniesr:529 is not listed on IDEAS
    5. Holden, Steinar, 1994. "Wage bargaining and nominal rigidities," European Economic Review, Elsevier, vol. 38(5), pages 1021-1039, May.
    6. Calmfors, Lars, 1993. "Lessons from the macroeconomic experience of Sweden," European Journal of Political Economy, Elsevier, vol. 9(1), pages 25-72, March.
    7. Hibbs, Douglas A, Jr & Locking, Hakan, 2000. "Wage Dispersion and Productive Efficiency: Evidence for Sweden," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 755-82, October.
    8. International Monetary Fund, 1999. "Neglected Heterogeneity and Dynamics in Cross-Country Savings Regressions," IMF Working Papers 99/128, International Monetary Fund.
    9. Daron Acemoglu & Joern-Steffen Pischke, 1999. "Certification of Training and Training Outcomes," Working papers 99-28, Massachusetts Institute of Technology (MIT), Department of Economics.
    10. Guzzo, Vincenzo & Velasco, Andres, 1999. "The case for a populist Central Banker," European Economic Review, Elsevier, vol. 43(7), pages 1317-1344, June.
    11. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
    12. Rodseth,A. & Nymoen,R., 1999. "Nordic wage formation and unemployment seven years later," Memorandum 10/1999, Oslo University, Department of Economics.
    13. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
    14. Per-Anders Edin & Bertl Holmlund, 1993. "The Swedish Wage Stucture: The Rise and Fall of Solidarity Wage Policy?," NBER Working Papers 4257, National Bureau of Economic Research, Inc.
    15. Stéphanie Guichard & Jean-Pierre Laffargue, 2000. "The Wage Curve: The Lessons of an Estimation Over a Panel of Countries," Working Papers 2000-21, CEPII research center.
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    Cited by:
    1. Athanasios Vamvakidis, 2009. "Regional Wage Differentiation and Wage Bargaining Systems in the European Union," Financial Theory and Practice, Institute of Public Finance, vol. 33(1), pages 73-87.
    2. Bowdler, Christopher & Nunziata, Luca, 2010. "Labor market structures and the sacrifice ratio," Journal of Macroeconomics, Elsevier, vol. 32(3), pages 816-826, September.
    3. Luminita VOCHITA & George CIOBANU & Andreea CIOBANU, 2008. "Implications of wage bargaining systems on regional differentiation in the European Union," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 2(36), pages 862-873, may.
    4. Athanasios Vamvakidis, 2008. "Regional Wage Differentiation and Wage Bargaining Systems in the EU," IMF Working Papers 08/43, International Monetary Fund.

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