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The outcome of individual wage bargaining and the influence of managers' bargaining power: evidence from union data

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Listed author(s):
  • Granqvist, Lena

    ()

    (Swedish Confederation of Professional Associations (SACO))

  • Regnér, Håkan

    ()

    (Swedish Confederation of Professional Associations (SACO))

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    Abstract

    We analyze unique data that identify whether individuals have participated in decentralized wage setting and whether they have negotiated their own wages. Wages are significantly higher for those who have been part of a formalized wage-setting process compared with non-participants, but only in the public sector. Employees who negotiate their own wages have higher wages than non-negotiators. Wages are also significantly higher for those who negotiate with a manager who has the power to set wages, compared with those who negotiate with a manager who has no power over wages. This concerns employees in the public and the private sectors. Quantile regression results reveal that the outcome of individual bargaining increases over the wage distribution. Percentile wage differences are significant only among workers who negotiate with a manager who has the power to set wages. Estimated wage differences between negotiators and non-negotiators are 4.6% on average, 5.6% in the 90th percentile, and 2.3% at the 10th percentile.

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    File URL: http://www.sofi.su.se/content/1/c6/03/09/74/WP06no3.pdf
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    Paper provided by Swedish Institute for Social Research in its series Working Paper Series with number 3/2006.

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    Length: 24 pages
    Date of creation: 08 May 2006
    Handle: RePEc:hhs:sofiwp:2006_003
    Contact details of provider: Postal:
    SOFI, Stockholm University, SE-10691 Stockholm, Sweden

    Phone: +46 (8) - 16 20 00
    Fax: +46 (8) - 15 46 70
    Web page: http://www.sofi.su.se/

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    Keywords: wage bargaining; earnings equations; decentralized wage setting; quantile regression;

    Find related papers by JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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    1. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2004. "Training in Europe," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 346-360, 04/05.
    2. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
    3. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    4. Levine, David I., 1991. "Cohesiveness, productivity, and wage dispersion," Journal of Economic Behavior & Organization, Elsevier, vol. 15(2), pages 237-255, March.
    5. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
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