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Envy, Fairness and Political Influence in Local Government Wage Determination: Evidence from Norway

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  • Strom, Bjarne

Abstract

The main question in this paper is: Do wages of low-skilled workers in Norwegian local governments adjust to clear the labor market for such workers, or are the wages affected by trade unions comparing their wages with other wages inside the local governments? The main empirical findings are as follows. First, wages of low-skilled local government employees respond not to wages in the external labor market, but to wages of higher skilled and higher paid workers inside the local government. Second, wages are positively associated with the share of socialist politicians in the local council. These results are interpreted as support for a union model with internal pay comparisons in Norwegian local governments. Copyright 1995 by The London School of Economics and Political Science.

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  • Strom, Bjarne, 1995. "Envy, Fairness and Political Influence in Local Government Wage Determination: Evidence from Norway," Economica, London School of Economics and Political Science, vol. 62(247), pages 389-409, August.
  • Handle: RePEc:bla:econom:v:62:y:1995:i:247:p:389-409
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    Cited by:

    1. Camarero, Mariam & D'Adamo, Gaetano & Tamarit, Cecilio, 2014. "Wage leadership models: A country-by-country analysis of the EMU," Economic Modelling, Elsevier, vol. 44(S1), pages 2-11.
    2. Lars-Erik Borge & Torberg Falch & Per Tovmo, 2008. "Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity, and democratic participation," Public Choice, Springer, vol. 136(3), pages 475-495, September.
    3. D'Adamo, Gaetano, 2011. "Wage spillovers across sectors in Eastern Europe," MPRA Paper 27841, University Library of Munich, Germany.
    4. Torberg Falch & Bjarne Strøm, 2003. "Wage Bargaining and Political Strength in the Public Sector," Working Paper Series 3203, Department of Economics, Norwegian University of Science and Technology.
    5. repec:eee:labchp:v:3:y:1999:i:pc:p:3573-3630 is not listed on IDEAS
    6. Fafchamps, Marcel & Shilpi, Forhad, 2008. "Subjective welfare, isolation, and relative consumption," Journal of Development Economics, Elsevier, vol. 86(1), pages 43-60, April.
    7. John Burger & Stephen Walters, 2008. "Testing Fair Wage Theory," Journal of Labor Research, Springer, vol. 29(4), pages 318-332, December.
      • John D. Burger & Stephen J.K. Walters, 2006. "Testing Fair Wage Theory," Working Papers 0623, International Association of Sports Economists;North American Association of Sports Economists.
    8. Revelli Federico & Tovmo Per, 2006. "Declared vs. revealed yardstick competition:Local government efficiency in Norway," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200605, University of Turin.
    9. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.

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