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Increased price markup from union coordination: OECD panel evidence

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  • Bjørnstad, Roger
  • Kalstad, Kjartan Øren

Abstract

Although coordination of wage bargaining probably affects entry barriers and competition in product markets, research on price determination has typically not considered such factors. In this paper the price markup depends on coordination and is estimated on a panel of 15 OECD countries. The estimates show that consumer prices may be as much as 21 percent higher in coordinated compared to uncoordinated countries, solely due to the effect of coordination on the price markup. Since coordination has a dampening effect on wages, this may explain why many researchers have been unable to find any clear effect of coordination on unemployment. --

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Paper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2010-13.

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Date of creation: 2010
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Handle: RePEc:zbw:ifwedp:201013

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Keywords: Imperfect competition model; price markup; labor market institutions; unemployment; panel data model;

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