IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Job Creation and Job Destruction with Local and Centralized Wage-Setting

  • Karl Ove Moene
  • Michael Wallerstein

We investigate the effects of the compression of wage differentials through centralized wage-setting in a context where growth depends on the continual reallocation of labor from older, less productive plants to new, more productive plants. We first compare plant-level and centralized wage bargaining in a unionized economy with homogeneous workers. With plant- level bargaining, the wage rate varies according to the productivity of the plant. With industry-level bargaining, the wage in all plants depends on the average productivity in the industry. As a consequence, plant-level bargaining prolongs the life of existing plants but may reduce the entry of new plants in comparison to centralized bargaining. Second, we derive wage differentials under different wage-setting institutions when workersÕ quality varies. We show that (a) competitive wage-setting is efficient but inegalitarian in that wage differentials exceed the underlying quality differentials among workers and (b) that wage compression through centralized bargaining can result in higher profits and higher entry than either decentralized bargaining or a competitive labor market.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by Institute for Policy Resarch at Northwestern University in its series IPR working papers with number 96-13.

as
in new window

Length:
Date of creation:
Date of revision:
Handle: RePEc:wop:nwuipr:96-13
Contact details of provider: Postal: 2040 Sheridan Road, Evanston, IL 60208-4100
Phone: 847-491-8712
Web page: http://www.nwu.edu/IPR/publications/wpindex1.html
Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wop:nwuipr:96-13. 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: (Thomas Krichel)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.