Are There Election Cycles in Wage Agreements? An Analysis of German Public Employees
In this article, the possibility of Nordhaus political wage cycles in the West German public services during 1961-65 is investigated. Since wage negotiations are centralized, one might expect a systematically higher wage increase shortly before a federal election. A regression of wage increases from 30 consecutive public sector pay contracts is run on an election variable and several additional explanatory variables. The null of no election influence is rejected for worker wage increases. The estimated increase in wages due to an imminent election is predicted to be in the range of 2.5 to 3 percentage points. Copyright 2003 by Kluwer Academic Publishers
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