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Wage Dispersion and Decentralization of Wage Bargaining

  • Dahl, Christian M.

    ()

    (University of Southern Denmark)

  • le Maire, Daniel

    ()

    (University of Copenhagen)

  • Munch, Jakob R.

    ()

    (University of Copenhagen)

This paper studies how decentralization of wage bargaining from sector to firm-level influences wage levels and wage dispersion. We use detailed panel data covering a period of decentralization in the Danish labor market. The decentralization process provides variation in the individual worker's wage-setting system that facilitates identification of the effects of decentralization. We find a wage premium associated with firm-level bargaining relative to sector-level bargaining, and that the return to skills is higher under the more decentralized wage-setting systems. Using quantile regression, we also find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6176.

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Length: 40 pages
Date of creation: Nov 2011
Date of revision:
Publication status: published in: Journal of Labor Economics, 2013, 31 (3), 501-533
Handle: RePEc:iza:izadps:dp6176
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