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Wage Drift and the Relevance of Centralised Wage Setting

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  • Holden, S.

Abstract

The system of wage setting in the Nordic countries is often regarded as highly centralised, contributing to considerable real wage flexibility. This view has been questioned, as the sizeable wage drift may offset the effect of the central negociations. This paper presents evidence from the four major Nordic countries, suggesting that there is no or little such offsetting effect. Yet the institutional system of wage formation may induce nominal rigidities at the central negociations, that may prevent wage restraint when there is little room for money wage growth.

Suggested Citation

  • Holden, S., 1998. "Wage Drift and the Relevance of Centralised Wage Setting," Memorandum 04/1998, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:1998_004
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/1998/Memo-04-1998.pdf
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    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. 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.
    3. Holden, S., 1989. "Wage Drift And Bargaining: Evidence From Norway," Papers 348, London School of Economics - Centre for Labour Economics.
    4. Calmfors, Lars, 1993. "Lessons from the macroeconomic experience of Sweden," European Journal of Political Economy, Elsevier, vol. 9(1), pages 25-72, March.
    5. Moene, K.O. & Wallerstein, M. & Hoel, M., 1992. "Bargaining Structure and Economic Performance," Memorandum 10/1992, Oslo University, Department of Economics.
    6. Holden, Steinar, 1988. " Local and Central Wage Bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 93-99.
    7. Hansen, Bruce E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, vol. 14(4), pages 517-533, August.
    8. Holden, Steinar, 1994. "Wage bargaining and nominal rigidities," European Economic Review, Elsevier, vol. 38(5), pages 1021-1039, May.
    9. Cramton, Peter C & Tracy, Joseph S, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," American Economic Review, American Economic Association, vol. 82(1), pages 100-121, March.
    10. Holden, Steinar, 1989. "Wage Drift and Bargaining: Evidence from Norway," Economica, London School of Economics and Political Science, vol. 56(224), pages 419-432, November.
    11. Steinar Holden, 1999. "Renegotiation and the Efficiency of Investments," RAND Journal of Economics, The RAND Corporation, vol. 30(1), pages 106-119, Spring.
    12. Moene, Karl O, 1988. "Unions' Threats and Wage Determination," Economic Journal, Royal Economic Society, vol. 98(391), pages 471-483, June.
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    More about this item

    Keywords

    WAGES;

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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