Bargained Wages, Wage Drift and the Design of the Wage Setting System
This paper aims at answering the question: How does a typically European bargaining system - with collective bargaining, extension mechanisms and national minimum wage - coexist with low unemployment rate and high wage flexibility? A unique data set on workers, firms and collective bargaining contracts in the Portuguese economy is used to analyze the determinants of both the bargained wage and the wage drift. Results indicate that wage drift stretches the returns to every worker and firm attribute, whereas it shrinks the returns to union bargaining power. Therefore, firm-specific arrangements, in the form of wage drift, partly offset collective bargaining, granting firms a high degree of freedom when setting wages. Union bargaining power raises the overall wage level, but lowers the returns on worker attributes, an outcome of the egalitarian policy pursued.
|Date of creation:||2003|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 21 321 32 00
Fax: 21 346 48 43
Web page: http://www.bportugal.pt
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.:
- Joop Hartog & Edwin Leuven & Coen N. Teulings, 2000.
"Wages and the Bargaining Regime in a Corporist Setting: The Netherlands,"
Tinbergen Institute Discussion Papers
00-013/3, Tinbergen Institute.
- Hartog, Joop & Leuven, Edwin & Teulings, Coen, 2002. "Wages and the bargaining regime in a corporatist setting: the Netherlands," European Journal of Political Economy, Elsevier, vol. 18(2), pages 317-331, June.
- Hartog, Joop & Leuven, Edwin & Teulings, Coen N, 1997. "Wages and the Bargaining Regime in a Corporatist Setting: The Netherlands," CEPR Discussion Papers 1706, C.E.P.R. Discussion Papers.
- Richard B. Freeman, 1983.
"Longitudinal Analyses of the Effects of Trade Unions,"
NBER Working Papers
1207, National Bureau of Economic Research, Inc.
- Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
- Freeman, Richard Barry, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Scholarly Articles 4631951, Harvard University Department of Economics.
- Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-79, July.
- Lemieux, Thomas, 1998. "Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 261-91, April.
- Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
- Agell, J. & Lommerud, K.E., 1990.
"Union Egalitarianism As Income Insurance,"
1990a, Uppsala - Working Paper Series.
- Richard B. Freeman, 1978.
"Unionism and the Dispersion of Wages,"
NBER Working Papers
0248, National Bureau of Economic Research, Inc.
- L Christofides & A Oswald, 1991.
"Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements,"
CEP Discussion Papers
dp0042, Centre for Economic Performance, LSE.
- Christofides, Louis N & Oswald, Andrew J, 1992. "Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 985-1002, August.
- David Fairris, 2003. "Unions and Wage Inequality in Mexico," ILR Review, Cornell University, ILR School, vol. 56(3), pages 481-497, April.
- Booth, Alison L, 1984. "A Public Choice Model of Trade Union Behaviour and Membership," Economic Journal, Royal Economic Society, vol. 94(376), pages 883-98, December.
- David Fairris, 2003. "Unions and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(3), pages 481-497, April.
- Ordine, Patrizia, 1995. "Wage drift and minimum contractual wage: Theoretical interrelationship and empirical evidence for Italy," Labour Economics, Elsevier, vol. 2(4), pages 335-357, December.
- Hibbs, Douglas Jr. & Locking, Hakan, 1996. "Wage compression, wage drift and wage inflation in Sweden," Labour Economics, Elsevier, vol. 3(2), pages 109-141, September.
When requesting a correction, please mention this item's handle: RePEc:ptu:wpaper:w200318. 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: (DEE-NTDD)
If references are entirely missing, you can add them using this form.