Centralized wage setting and labor market policies: the nordic model case
It is often argued that rigid labour market and centralized bargaining are harmful employment and growth. This paper looks at the case of Nordic countries as a counter-example pointing to some weaknesses of this view. Rigid labour markets, while reducing the offer of low quality jobs, increase average labor productivity by favoring job relocation in high quality jobs. Moene and Wallerstein (1997) adopted a vintage-capital model to compare centralized and decentralized bargaining: they show that centralized bargaining systems yield higher labor productivity and higher structural unemployment. By introducing a frictional labor market in the vintage-capital framework , we show that the negative effects on employment characterizing centralized bargaining can be reduced by adopting active labor market policy.
|Date of creation:||Jan 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Moene, Karl Ove & Wallerstein, Michael, 1997. "Pay Inequality," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 403-30, July.
- Lennart Erixon, 2010.
"The Rehn-Meidner Model in Sweden: Its Rise, Challenges and Survival,"
Journal of Economic Issues,
M.E. Sharpe, Inc., vol. 44(3), pages 677-715, September.
- Erixon, Lennart, 2008. "The Rehn-Meidner Model in Sweden: Its Rise, Challenges and Survival," Research Papers in Economics 2008:2, Stockholm University, Department of Economics.
- Krueger, Dirk & Kumar, Krishna B., 2004.
"US-Europe differences in technology-driven growth: quantifying the role of education,"
Journal of Monetary Economics,
Elsevier, vol. 51(1), pages 161-190, January.
- Dirk Krueger & Krishna B. Kumar, 2003. "US-Europe Differences in Technology-Driven Growth: Quantifying the Role of Education," NBER Working Papers 10001, National Bureau of Economic Research, Inc.
- Dale T. Mortensen & Christopher A. Pissarides, 1998. "Technological Progress, Job Creation and Job Destruction," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(4), pages 733-753, October.
- Aghion, Philippe & Howitt, Peter, 1991.
"Growth and Unemployment,"
CEPR Discussion Papers
577, C.E.P.R. Discussion Papers.
- Hibbs, Douglas A, Jr & Locking, Hakan, 2000.
"Wage Dispersion and Productive Efficiency: Evidence for Sweden,"
Journal of Labor Economics,
University of Chicago Press, vol. 18(4), pages 755-82, October.
- Hibbs Jr., Douglas A. & Locking, Håkan, 2000. "Wage Dispersion and Productive Efficiency: Evidence For Sweden," Working Papers in Economics 21, University of Gothenburg, Department of Economics.
- Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2006.
"Technology-policy interaction in frictional labor markets,"
06-10, Federal Reserve Bank of Richmond.
- Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2007. "Technology—Policy Interaction in Frictional Labour-Markets," Review of Economic Studies, Oxford University Press, vol. 74(4), pages 1089-1124.
- Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:21502. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.