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Unionization and the Evolution of the Wage Distribution in Sweden: 1968 to 2000

  • James Albrecht
  • Anders Bj?rklund
  • Susan Vroman

Using the 1968, 1981, and 2000 Swedish Level of Living Surveys, the authors examine the evolution of the wage distribution in Sweden over the periods 1968-1981 and 1981-2000. The first period was the heyday of the Swedish solidarity wage policy with strong equalization clauses in the central wage agreements. During the second period, there was more flexibility for firms to adjust wages to reflect conditions such as labor shortages in particular fields. The authors find a remarkable narrowing of the wage distribution in the first period, but in the second period, wages grew more equally across the distribution. The authors decompose these changes in wages across the distribution into two components those due to changes in the distribution of characteristics such as education and experience and those due to changes in the distribution of returns to those characteristics. They find that the wage compression between 1968 and 1981 was driven by changes in the distribution of returns, but between 1981 and 2000, the change in the distribution of returns had less of an effect on wage compression.

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 64 (2011)
Issue (Month): 5 (October)
Pages: 1039-1057

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Handle: RePEc:ilr:articl:v:64:y:2011:i:5:p:1039-1057
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  1. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters, in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
  2. Jim Albrecht & Aico van Vuuren & Susan Vroman, 2007. "Counterfactual Distributions with Sample Selection Adjustments: Econometric Theory and an Application to the Netherlands," Working Papers gueconwpa~07-07-06, Georgetown University, Department of Economics.
  3. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, November.
  4. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  5. Peter Fredriksson & Robert H. Topel, 2010. "Wage Determination and Employment in Sweden Since the Early 1990s: Wage Formation in a New Setting," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 83-126 National Bureau of Economic Research, Inc.
  6. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 843-881, May.
  7. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," Harvard Institute of Economic Research Working Papers 2096, Harvard - Institute of Economic Research.
  8. Albrecht, James & Björklund, Anders & Vroman, Susan, 2001. "Is There a Glass Ceiling in Sweden?," IZA Discussion Papers 282, Institute for the Study of Labor (IZA).
  9. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
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