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Wage Dispersion and Productive Efficiency: Evidence for Sweden

  • Hibbs, Douglas A, Jr
  • Locking, Hakan

The Swedish record of enormous compression of relative wages under centralized "solidarity" bargaining, followed by substantial decompression of wages after central bargaining broke down, supplies observations well suited to empirical evaluation of arguments about the response of productive efficiency to shifts in wage distribution. We obtain no results supporting "fairness, morale, and cohesiveness" theories implying that wage leveling within workplaces and industries may enhance productivity. Reduction of interindustry wage differentials evidently did, however, contribute positively to aggregate output and productivity growth, most likely for the structural reasons first emphasized by Swedish trade union economists almost a half century ago. Copyright 2000 by University of Chicago Press.

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Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 18 (2000)
Issue (Month): 4 (October)
Pages: 755-82

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Handle: RePEc:ucp:jlabec:v:18:y:2000:i:4:p:755-82
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  14. Teulings,Coen & Hartog,Joop, 2008. "Corporatism or Competition?," Cambridge Books, Cambridge University Press, number 9780521049399, April.
  15. Hibbs, Douglas Jr. & Locking, Hakan, 1996. "Wage compression, wage drift and wage inflation in Sweden," Labour Economics, Elsevier, vol. 3(2), pages 109-141, September.
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