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Regional Wage Differentiation and Wage Bargaining Systems in the European Union

  • Athanasios Vamvakidis

    (International Monetary Fund, Washington, USA)

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    The theoretical literature has argued that a centralized wage bargaining system may result in low regional wage differentiation and high regional unemployment differentials. The empirical literature has found that centralized wage bargaining leads to lower wage inequality for different skills, industries and population groups, but the evidence on its impact on regional wage differentiation is scant. Empirical evidence in this paper for European Union regions for the period 1980-2000 suggests that countries with more coordinated wage bargaining systems have lower regional wage differentials, after controlling for regional productivity and unemployment differentials. Estimates from wage curves for Germany and Italy based on panels of regions also suggest some links between the estimated elasticities and the level of coordination in wage bargaining.

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    File URL: http://www.ijf.hr/eng/FTP/2009/1/vamvakidis.pdf
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    Article provided by Institute of Public Finance in its journal Financial Theory and Practice.

    Volume (Year): 33 (2009)
    Issue (Month): 1 ()
    Pages: 73-87

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    Handle: RePEc:ipf:finteo:v:33:y:2009:i:1:p:73-87
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    1. Brunello, Giorgio & Lupi, Claudio & Ordine, Patrizia, 2001. "Widening differences in Italian regional unemployment," Labour Economics, Elsevier, vol. 8(1), pages 103-129, January.
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    6. Iara, Anna & Traistaru, Iulia, 2004. "How flexible are wages in EU accession countries?," Labour Economics, Elsevier, vol. 11(4), pages 431-450, August.
    7. Alun H. Thomas, 2002. "The Costs and Benefits of Various Wage Bargaining Structures; An Empirical Exploration," IMF Working Papers 02/71, International Monetary Fund.
    8. Jörg Decressin & Anja Decressin, 2002. "On Sand and the Role of Grease in Labor Markets; How Does Germany Compare?," IMF Working Papers 02/164, International Monetary Fund.
    9. Carlo Dell'Aringa & Laura Pagani, 2007. "Collective Bargaining and Wage Dispersion in Europe," British Journal of Industrial Relations, London School of Economics, vol. 45(1), pages 29-54, 03.
    10. Cukierman, A. & Lippi, F., 1998. "Central Bank Independence, Centralization of Wage Bargaining, Inflation and Unemployment - Theory and Some Evidence," Discussion Paper 1998-116, Tilburg University, Center for Economic Research.
    11. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
    12. Lucio R. Pench & Paolo Sestito & Elisabetta Frontini, 1999. "Some unpleasant arithmetics of regional unemployment in the EU. Are there any lessons for EMU?," European Economy - Economic Papers 134, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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