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Distributional Effects of Wage Leadership: Evidence from Sweden

Author

Listed:
  • Lundborg, Per

    (Swedish Institute for Social Research, Stockholm University)

Abstract

This paper represents the first analysis of the consequences of a formal wage leadership, the Swedish Industry Agreement. We show that leadership in general has implied a lowered wage level for occupational groups having signed the agreement compared to groups that have not signed it. This is as expected as wage leadership should stabilize wage increases. However, the effects differ widely across occupations and skilled groups that signed the agreement have raised their wage level compared to otherwise similar workers outside the agreement. The agreement seems to have had a less binding effect on skilled workers. A possible explanation is that local wage formation is more common among the skilled groups. The agreement has increased the wage level among high educated compared to low educated and thus raised the education premium. Difference-in-differences models are applied using register data 1990-2005.

Suggested Citation

  • Lundborg, Per, 2009. "Distributional Effects of Wage Leadership: Evidence from Sweden," Working Paper Series 6/2009, Stockholm University, Swedish Institute for Social Research.
    • Handle: RePEc:hhs:sofiwp:2009_006
    as

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    File URL: http://www.sofi.su.se/content/1/c6/03/09/74/WP09no6.pdf
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    References listed on IDEAS

    as
    1. J. Lindquist & Roger Vilhelmsson, 2006. "Is the Swedish central government a wage leader?," Applied Economics, Taylor & Francis Journals, vol. 38(14), pages 1617-1625.
    2. Friberg, Kent, 2003. "Intersectoral Wage Linkages in Sweden," Working Paper Series 158, Sveriges Riksbank (Central Bank of Sweden).
    3. Jacobson, Tor & Ohlsson, Henry, 1994. "Long-Run Relations between Private and Public Sector Wages in Sweden," Empirical Economics, Springer, vol. 19(3), pages 343-360.
    4. Holmlund, B. & Ohlsson, H., 1990. "Wage Linkages Between Private and Public Sectors," Papers 1990t, Uppsala - Working Paper Series.
    5. Paul L. Latreille & Neil Manning, 2000. "Inter‐industry and Inter‐occupational Wage Spillovers in UK Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(1), pages 83-99, February.
    6. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
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    More about this item

    Keywords

    Wage leadership; Differences-in-differences.;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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