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Wage Bargaining, Privatisation, Ability to Pay and Outside Options: Evidence from Hungary

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  • Janos Kollő
  • Tomasz Mickiewicz

Abstract

This article examines the determinants of short-term wage dynamics, using a sample of large Hungarian companies for 1996-99. We test the basic implications of an efficient contract model of bargaining between incumbent employees and managers, which the data do not reject. In particular, there are structural differences between the ownership sectors consistent with our prior knowledge on relative bargaining strength and unionisation measures. Stronger bargaining position of workers leads to higher ability to pay elasticity of wages, and lower outside option elasticity. Our results indicate that while bargaining position of workers in domestic privatised firms may be weaker than in the state sector, the more robust difference relates to state sector workers versus privatised firms with majority foreign ownership.

Suggested Citation

  • Janos Kollő & Tomasz Mickiewicz, 2005. "Wage Bargaining, Privatisation, Ability to Pay and Outside Options: Evidence from Hungary," Post-Communist Economies, Taylor & Francis Journals, vol. 17(4), pages 465-483.
    • Handle: RePEc:taf:pocoec:v:17:y:2005:i:4:p:465-483
    DOI: 10.1080/14631370500350926
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    1. Karoly Fazekas & Gyorgy Molnar (ed.), 2011. "The Hungarian Labour Market 2011," The Hungarian Labour Market Yearbooks, Institute of Economics, Centre for Economic and Regional Studies, number 2011, December.
    2. János Köllo, 2011. "Hungary: Crisis Coupled with a Fiscal Squeeze – Effects on Inequality," Chapters, in: Daniel Vaughan-Whitehead (ed.), Work Inequalities in the Crisis, chapter 7, Edward Elgar Publishing.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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