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The Process of Wage Adjustment: An Analysis Using Establishment- Level Data

In this article, we use data from Spanish manufacturing plants to analyze the determinants of the importance attributed to several criteria when wages are adjusted. More specifically, the criteria we take into account in the study are the cost of living, the wages of the firm in relation to its competitors, the fulfillment of collective agreements at sector level, the need to recruit and retain employees, the performance of the organization, and the industrial relations climate. Our results show that the structural characteristics of the establishment, as well as the wage setting arrangements and trade unions, play a role in explaining the importance of the factors mentioned in shaping wage adjustments. The human resource management policies adopted by the employer seem to be less relevant.

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Paper provided by Departamento de Economía - Universidad Pública de Navarra in its series Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra with number 1306.

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Date of creation: 2013
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Publication status: Published in
Handle: RePEc:nav:ecupna:1306
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  1. Jimenez-Martin, Sergi, 1998. "Indexation and Wage Change Settlement: Evidence from Spanish Manufacturing Firms," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(4), pages 449-84, November.
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  9. Max Gruetter & Rafael Lalive, . "The Importance of Firms in Wage Determination," IEW - Working Papers 207, Institute for Empirical Research in Economics - University of Zurich.
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  12. Sergi Jiménez-Martín, 2004. "Strike outcomes and wage settlements in Spain," Economics Working Papers 750, Department of Economics and Business, Universitat Pompeu Fabra.
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  17. Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 881-919, November.
  18. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
  19. Oliver E. Williamson, 2010. "Transaction Cost Economics: The Natural Progression," American Economic Review, American Economic Association, vol. 100(3), pages 673-90, June.
  20. Juan Francisco Canal Domínguez & César Rodríguez Gutiérrez, 2004. "Collective Bargaining and Within-firm Wage Dispersion in Spain," British Journal of Industrial Relations, London School of Economics, vol. 42(3), pages 481-506, 09.
  21. Groshen, Erica L, 1991. "Sources of Intra-industry Wage Dispersion: How Much Do Employers Matter?," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 869-84, August.
  22. Heywood, John S & Hubler, Olaf & Jirjahn, Uwe, 1998. "Variable Payment Schemes and Industrial Relations: Evidence from Germany," Kyklos, Wiley Blackwell, vol. 51(2), pages 237-57.
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  25. Leung, Siu Fai & Yu, Shihti, 1996. "On the choice between sample selection and two-part models," Journal of Econometrics, Elsevier, vol. 72(1-2), pages 197-229.
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