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The Costs and Benefits of Various Wage Bargaining Structures; An Empirical Exploration

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  • Alun H. Thomas

Abstract

The literature on the relationship between the unemployment rate and wage bargaining fails to separate the offsetting effects of a reduction in competition associated with centralized bargaining and the increased awareness of unemployment externalities. This paper uses OECD data to distinguish these effects. While wages have become more sensitive to changes in the unemployment rate in countries that have switched to centralized wage-bargaining arrangements, the industry wage is not particularly sensitive to internal factors (relative price and productivity shifts) in economies with centralized/industry-level bargaining arrangements. The latter effect dominates in terms of persistently high unemployment and weaker growth.

Suggested Citation

  • Alun H. Thomas, 2002. "The Costs and Benefits of Various Wage Bargaining Structures; An Empirical Exploration," IMF Working Papers 02/71, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:02/71
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    References listed on IDEAS

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    Cited by:

    1. Athanasios Vamvakidis, 2009. "Regional Wage Differentiation and Wage Bargaining Systems in the European Union," Financial Theory and Practice, Institute of Public Finance, vol. 33(1), pages 73-87.
    2. Athanasios Vamvakidis, 2008. "Regional Wage Differentiation and Wage Bargaining Systems in the EU," IMF Working Papers 08/43, International Monetary Fund.
    3. Luminita VOCHITA & George CIOBANU & Andreea CIOBANU, 2008. "Implications of wage bargaining systems on regional differentiation in the European Union," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 2(36), pages 862-873, may.
    4. Bowdler, Christopher & Nunziata, Luca, 2010. "Labor market structures and the sacrifice ratio," Journal of Macroeconomics, Elsevier, vol. 32(3), pages 816-826, September.
    5. Frenkel, Roberto & Ros, Jaime, 2004. "Unemployment, macroeconomic policy and labor market flexibility: Argentina and Mexico in the 1990s," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 31908, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. International Monetary Fund, 2005. "Finland; Selected Issues," IMF Staff Country Reports 05/36, International Monetary Fund.

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