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The Effects of the Decentralization of Collective Bargaining on Wage Differences Among Employee Groups

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  • Kauhanen, Antti

Abstract

Recently, Finnish forest industries shifted from sectoral collective bargaining to firm-level bargaining, and the IT services industry shifted to a hybrid of sector- and firm-level bargaining. These changes meant that all issues previously covered by sectoral agreements would now be negotiated at the firm level, which could lead to notable contract changes. A study previously published by ETLA showed that decentralization of bargaining had only modest impacts on the level and dispersion of wages. Of the groups examined, only for blue-collar workers in paper industries, decentralization led to higher wages and increased wage dispersion within firms. This study examines the effects of the transition to firm-level agreements on pay differences between different groups. Previous international research has shown that decentralization of the collective bargaining system can lead to an increase in the gender pay gap or to an increase in the pay gap between different educational groups. The results of the study show that in Finland, the move away from union-specific bargaining did not increase pay differences between different groups.

Suggested Citation

  • Kauhanen, Antti, 2024. "The Effects of the Decentralization of Collective Bargaining on Wage Differences Among Employee Groups," ETLA Working Papers 118, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:wpaper:118
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    References listed on IDEAS

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    1. Anni Heikkilä & Hannu Piekkola, 2005. "Explaining the Desire for Local Bargaining: Evidence from a Finnish Survey of Employers and Employees," LABOUR, CEIS, vol. 19(2), pages 399-423, June.
    2. Clarke, Damian & Pailañir, Daniel & Athey, Susan & Imbens, Guido W., 2023. "Synthetic Difference-in-Differences Estimation," IZA Discussion Papers 15907, IZA Network @ LISER.
    3. Antti Kauhanen & Terhi Maczulskij & Krista Riukula, 2024. "The incidence and effects of decentralized wage bargaining in Finland," Journal of Labor Research, Springer, vol. 45(2), pages 232-253, June.
    4. Dmitry Arkhangelsky & Susan Athey & David A. Hirshberg & Guido W. Imbens & Stefan Wager, 2021. "Synthetic Difference-in-Differences," American Economic Review, American Economic Association, vol. 111(12), pages 4088-4118, December.
    5. Jelle Visser, 2016. "What happened to collective bargaining during the great recession?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-35, December.
    6. Christian M. Dahl & Daniel le Maire & Jakob R. Munch, 2013. "Wage Dispersion and Decentralization of Wage Bargaining," Journal of Labor Economics, University of Chicago Press, vol. 31(3), pages 501-533.
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    More about this item

    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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