Pattern Bargaining and Wage Leadership in a Small Open Economy
Pattern bargaining with the tradables (manufacturing) sector as wage leader is a common form of wage bargaining in Europe. We question the conventional wisdom that such bargaining produces wage restraint. In our model all forms of pattern bargaining give the same outcomes as uncoordinated bargaining under inflation targeting. Under monetary union wage leadership for the non-tradables sector is conducive to wage restraint, whereas wage leadership for the tradables sector is not. Comparison thinking may lead the follower to set the same wage as the leader. Such equilibria can arise when the leader sector is the smaller sector and promote high employment.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Holden,S., 1999.
"Wage setting under different monetary regimes,"
12/1999, Oslo University, Department of Economics.
- Cukierman, A. & Lippi, F., 1998.
"Central Bank Independence, Centralization of Wage Bargaining, Inflation and Unemployment - Theory and Some Evidence,"
1998-116, Tilburg University, Center for Economic Research.
- Cukierman, Alex & Lippi, Francesco, 1999. "Central bank independence, centralization of wage bargaining, inflation and unemployment:: Theory and some evidence," European Economic Review, Elsevier, vol. 43(7), pages 1395-1434, June.
- Coricelli, Fabrizio & Cukierman, Alex & Dalmazzo, Alberto, 2000.
"Monetary Institutions, Monopolistic Competition, Unionized Labour Markets And Economic Performance,"
CEPR Discussion Papers
2407, C.E.P.R. Discussion Papers.
- Fabrizio Coricelli & Alex Cukierman & Alberto Dalmazzo, 2006. "Monetary Institutions, Monopolistic Competition, Unionized Labor Markets and Economic Performance," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 39-63, 03.
- Vartiainen, Juhana, 2010. "Interpreting Wage Bargaining Norms," Working Paper 116, National Institute of Economic Research.
- Amos Tversky & Daniel Kahneman, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Levine's Working Paper Archive
7656, David K. Levine.
- Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March.
- Bhaskar, V, 1990. "Wage Relativities and the Natural Range of Unemployment," Economic Journal, Royal Economic Society, vol. 100(400), pages 60-66, Supplemen.
- David Soskice & Torben Iversen, 2000. "The Nonneutrality Of Monetary Policy With Large Price Or Wage Setters," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 265-284, February.
- Vartiainen, Juhana, 2002. " Relative Prices in Monetary Union and Floating," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(2), pages 277-87, June.
- Corsetti, Giancarlo & Devereux, Michael P. & Guiso, Luigi & Hassler, John & Saint-Paul, Gilles & Sinn, Hans-Werner & Sturm, Jan-Egbert & Vives, Xavier, 2010. "The European economy," Munich Reprints in Economics 20104, University of Munich, Department of Economics.
- Steinar Holden & Fredrik Wulfsberg, 2007. "How strong is the case for downward real wage rigidity?," Working Papers 07-6, Federal Reserve Bank of Boston.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3510. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra)
If references are entirely missing, you can add them using this form.