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Wage Dispersion and Decentralization of Wage Bargaining

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Author Info

  • Christian M. Dahl

    (School of Economics and Management, University of Aarhus)

  • Daniel le Maire

    (Department of Economics, University of Copenhagen)

  • Jakob R. Munch

    (Department of Economics, University of Copenhagen)

Abstract

This paper studies how decentralization of wage bargaining from sector to firm level influences wage levels and wage dispersion. We use a detailed panel data set covering a period of decentralization in the Danish labor market. The decentralization process provides exogenous variation in the individual worker's wage-setting system that facilitates identification of the effects of decentralization. Consistent with predictions we find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems. However, the differences across wage-setting systems are reduced substantially when controlling for unobserved individual level heterogeneity.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 09-15.

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Length: 25 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:kud:kuiedp:0915

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Keywords: Wage bargaining; decentralization; panel data quantile regression;

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Citations

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Cited by:
  1. Damoun Ashournia & Jakob Munch & Daniel Nguyen, 2014. "The Impact of Chinese Import Penetration on Danish Firms and Workers," Economics Series Working Papers 703, University of Oxford, Department of Economics.
  2. Paul Bingley & Lorenzo Cappellari & Niels Westergård-Nielsen, 2012. "Flexicurity, wage dynamics and inequality over the life-cycle," Working Papers 2, Department of the Treasury, Ministry of the Economy and of Finance.
  3. Karlson, Nils & Lindberg, Henrik, 2011. "The Decentralization of Wage Bargaining: Four Cases," Ratio Working Papers 178, The Ratio Institute.
  4. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute for the Study of Labor (IZA).

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