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Real Wage Determinatioan in Collective BArgaining Agreements

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  • Louis N. Christofides
  • Andrew J. Oswald

Abstract

This paper studies the determinants of real wage rates using data on Canadian labour contracts signed between 1978 and 1984. Its results are consistent with Dunlop's neglected (1944) hypothesis that real pay movements are shaped by product price changes (contrary to the predictions of implicit contract theory and other models of wage inflexibility). The level of the unemployment rate is found to lower the real wage level with an elasticity between -0.04 and -0.13, whereas a Phillips Curve specification which relates wage changes to the level of the unemployment rate is not convincingly supported by the data. These results may be seen as consistent with the view that collective bargaining is a form of rent-sharing in which external unemployment weakens workers' bargaining strength.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3188.

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Date of creation: Nov 1989
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Publication status: Published as "Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements", Quarterly Journal of Economics, Vol. 107, no. 3(1992): 985-1002.
Handle: RePEc:nbr:nberwo:3188

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Cited by:
  1. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, December.
  2. W. Jos Jansen & Ad C.J. Stokman, 2003. "International rent sharing and domestic labour markets: a macroeconomic analaysis," WO Research Memoranda (discontinued) 749, Netherlands Central Bank, Research Department.
  3. Blanchflower, D., 1989. "Fear, Unemployment And Pay Flexibility," Papers 344, London School of Economics - Centre for Labour Economics.
  4. Louis N. Christofides & Andrew J. Oswald, 1991. "Efficient and Inefficient Employment Outcomes: A Study Based on Canadian Data," NBER Working Papers 3648, National Bureau of Economic Research, Inc.
  5. Graafland, J.J., 1991. "From Phillips curve to wage curve," MPRA Paper 21077, University Library of Munich, Germany.

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