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Wage Flexibility in a Unionized Economy with Stable Wage Dispersion

Author

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  • Carlsson, Mikael

    (Uppsala University)

  • Häkkinen Skans, Iida

    (National Institute of Economic Research - NIER)

  • Nordström Skans, Oskar

    (Uppsala University)

Abstract

The paper estimates how wages respond to changes in regional unemployment using detailed Swedish micro data. The study is set in an economy with close to complete union coverage where real wages have grown continuously in all parts of the wage distribution for the past 15 years, and where the aggregate wage dispersion has remained constant for the same period. Our results show that this aggregate stability is coupled with non-trivial flexibility in terms of wage adjustments to changes in regional unemployment. Accounting for the fluctuations in composition of the employees is important for the estimated elasticity of wages. Wage adjustments are larger for employees with high unemployment risk and for new hires entering from unemployment.

Suggested Citation

  • Carlsson, Mikael & Häkkinen Skans, Iida & Nordström Skans, Oskar, 2019. "Wage Flexibility in a Unionized Economy with Stable Wage Dispersion," IZA Discussion Papers 12093, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12093
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    Cited by:

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    2. Christopher F. Baum & Hans Lööf & Andreas Stephan & Klaus F. Zimmermann, 2018. "Estimating the wage premia of refugee immigrants: Lessons from Sweden," Boston College Working Papers in Economics 963, Boston College Department of Economics, revised 22 Feb 2024.

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    More about this item

    Keywords

    wages; unemployment; unions; wage flexibility;
    All these keywords.

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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