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Real Wage Determinatioan in Collective BArgaining Agreements

Listed author(s):
  • Louis N. Christofides
  • Andrew J. Oswald

This paper studies the determinants of real wage rates using data on Canadian labour contracts signed between 1978 and 1984. Its results are consistent with Dunlop's neglected (1944) hypothesis that real pay movements are shaped by product price changes (contrary to the predictions of implicit contract theory and other models of wage inflexibility). The level of the unemployment rate is found to lower the real wage level with an elasticity between -0.04 and -0.13, whereas a Phillips Curve specification which relates wage changes to the level of the unemployment rate is not convincingly supported by the data. These results may be seen as consistent with the view that collective bargaining is a form of rent-sharing in which external unemployment weakens workers' bargaining strength.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3188.

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Date of creation: Nov 1989
Publication status: Published as "Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements", Quarterly Journal of Economics, Vol. 107, no. 3(1992): 985-1002.
Handle: RePEc:nbr:nberwo:3188
Note: LS
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