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Wage Dispersion and Decentralization of Wage Bargaining

  • Christian M. Dahl

    ()

    (University of Southern Denmark and CREATES)

  • Daniel le Maire

    ()

    (Department of Economics, University of Copenhagen)

  • Jakob R. Munch

    ()

    (Department of Economics, University of Copenhagen)

This paper studies how decentralization of wage bargaining from sector to firm-level influences wage levels and wage dispersion. We use detailed panel data covering a period of decentralization in the Danish labor market. The decentralization process provides variation in the individual worker's wage-setting system that facilitates identification of the effects of decentralization. We find a wage premium associated with firm-level bargaining relative to sector-level bargaining, and that the return to skills is higher under the more decentralized wage-setting systems. Using quantiel regression, we also find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems.

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Paper provided by School of Economics and Management, University of Aarhus in its series CREATES Research Papers with number 2011-48.

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Length: 38
Date of creation: 30 Nov 2011
Date of revision:
Handle: RePEc:aah:create:2011-48
Contact details of provider: Web page: http://www.econ.au.dk/afn/

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