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Unionization and the Evolution of the Wage Distribution in Sweden: 1968 to 2000

Author

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  • Albrecht, James

    () (Georgetown University)

  • Björklund, Anders

    () (SOFI, Stockholm University)

  • Vroman, Susan

    () (Georgetown University)

Abstract

We examine the evolution of the Swedish wage distribution over the periods 1968-1981 and 1981-2000. The first period was the heyday of the Swedish solidarity wage policy with strongly equalization clauses in the central wage agreements. During the second period, there was more scope for firm-specific factors to affect wages. We find a remarkable compression of wages across the distribution in the first period, but in the second period, wage growth was quite uniform across the distribution. We decompose these changes across the distribution into two components – those due to changes in the distribution of characteristics such as education and experience and those due to changes in the distribution of returns to those characteristics. The wage compression between 1968 and 1981 was driven by changes in the distribution of returns, but between 1981 and 2000, the change in the distribution of returns was neutral with respect to inequality.

Suggested Citation

  • Albrecht, James & Björklund, Anders & Vroman, Susan, 2009. "Unionization and the Evolution of the Wage Distribution in Sweden: 1968 to 2000," IZA Discussion Papers 4246, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4246
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    References listed on IDEAS

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    1. Per-Anders Edin & Bertil Holmlund, 1995. "The Swedish Wage Structure: The Rise and Fall of Solidarity Wage Policy?," NBER Chapters,in: Differences and Changes in Wage Structures, pages 307-344 National Bureau of Economic Research, Inc.
    2. Peter Fredriksson & Robert H. Topel, 2010. "Wage Determination and Employment in Sweden Since the Early 1990s: Wage Formation in a New Setting," NBER Chapters,in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 83-126 National Bureau of Economic Research, Inc.
    3. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 843-881.
    4. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Rising Wage Inequality: The Role of Composition and Prices," NBER Working Papers 11628, National Bureau of Economic Research, Inc.
    5. Albrecht, James & van Vuuren, Aico & Vroman, Susan, 2009. "Counterfactual distributions with sample selection adjustments: Econometric theory and an application to the Netherlands," Labour Economics, Elsevier, vol. 16(4), pages 383-396, August.
    6. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
    7. James Albrecht & Anders Bjorklund & Susan Vroman, 2003. "Is There a Glass Ceiling in Sweden?," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 145-177, January.
    8. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, January.
    9. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
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    Cited by:

    1. Rebekka Christopoulou & Theodora Kosma, 2009. "Skills and Wage Inequality in Greece: Evidence from Matched Employer-Employee Data, 1995-2002," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 26, Hellenic Observatory, LSE.

    More about this item

    Keywords

    quantile regression; wage compression; unionization;

    JEL classification:

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

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