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Who Ultimately Bears the Burden of Greater Non-Wage Labour costs?

  • Rodolphe Desbordes

    ()

    (Department of Economics, University of Strathclyde)

  • Céline Azémar

    ()

    (Department of Economics, University of Glasgow)

We investigate the effect of a rise in non-wage labour costs (NWLC) on real manufacturing labour costs in OECD countries, taking into account the degree of coordination in the wage bargaining process. We find that, in countries in which wage bargaining is not highly coordinated, 55% of an increase in NWLC appears to be shifted to workers in the long run, whereas in countries operating under a highly coordinated bargaining regime, full shifting occurs. Overall, our results suggest that high NWLC can be associated with a high equilibrium unemployment rate, but only in those OECD countries that do not have highly coordinated wage bargaining.

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Paper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 1004.

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Length: 22 pages
Date of creation: Feb 2010
Handle: RePEc:str:wpaper:1004
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