The Regional Dimension of Collective Wage Bargaining: The Case of Belgium
AbstractThe potential failure of national industry agreements to take into account productivity levels of least productive regions has been considered as one of the causes of regional unemployment in European countries. Two solutions are generally proposed: the first, encouraged by the European commission and the OECD, consists in decentralising wage bargaining to the firm. The second solution, the regionalisation of wage bargaining, is frequently mentioned in Belgium or in Italy where regional unemployment differentials are high. The objective of this paper is to verify if the Belgian wage setting system, where industry bargaining has a national scope, indeed prevents regional productivity levels to be taken into account in wage formation. Using a very rich linked employer-employee dataset which provides detailed information on wages, productivity, and worker's and firm's characteristics, we find that regional wage differentials and regional productivity differentials within joint committees are positively correlated. Moreover, this relation is stronger (i) for joint committees where firm-level bargaining is relatively frequent and (ii) for joint committees already sub-divided along a local line. We conclude that the current Belgian wage setting system (which combines interprofessional, industry and firm level bargaining) already includes mechanisms that allow regional productivity to be taken into account.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3864.
Length: 32 pages
Date of creation: Dec 2008
Date of revision:
Publication status: published in: Regional Studies, 2014, 48 (2), 301-317
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Other versions of this item:
- Michael Rusinek & Ilan Tojerow, 2014. "The Regional Dimension of Collective Wage Bargaining: The Case of Belgium," Regional Studies, Taylor & Francis Journals, vol. 48(2), pages 301-317, February.
- Michael Rusinek & Ilan Tojerow, 2013. "The Regional Dimension of Collective Wage Bargaining: The Case of Belgium," ULB Institutional Repository 2013/145686, ULB -- Universite Libre de Bruxelles.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-21 (All new papers)
- NEP-BEC-2008-12-21 (Business Economics)
- NEP-GEO-2008-12-21 (Economic Geography)
- NEP-LAB-2008-12-21 (Labour Economics)
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