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Regulating Collective Bargaining in Developing Countries: Lessons from Three Developed Countries


  • John Pencavel


September 1997 What can developing economies learn from the experience of developed economies about how best to regulate unionism and collective bargaining? This paper addresses this question by offering four principles that should guide economic policy on unionism and collective bargaining and then by examining the record of three countries - Australia, New Zealand, and Britain - to illustrate the operation of these principles. Although these three countries share a common heritage, their approach to these issues has been quite different: Australia and New Zealand designed quasi-judicial systems that have intervened extensively in collective bargaining while Britain has followed a tradition in which the explicit role of law was small. These characterizations have changed a good deal in the last fifteen years with the role of the law playing a larger part in Britain and with the systems in Australia and New Zealand undergoing substantial reform. I argue that, appearances notwithstanding, the changes in Australia have been meager while those in New Zealand have been much more radical. I argue also that the traditional characterization of Britain was never accurate and that the influence of the state on collective bargaining was indirect yet substantial. Clearly, industrial relations have changed considerably in Britain since 1979, but I suggest the changes in product market competition and the associated move toward enterprise bargaining have been the principal cause of the changes in collective bargaining and the diminished role of unionism.

Suggested Citation

  • John Pencavel, 1997. "Regulating Collective Bargaining in Developing Countries: Lessons from Three Developed Countries," Working Papers 97025, Stanford University, Department of Economics.
  • Handle: RePEc:wop:stanec:97025

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    References listed on IDEAS

    1. Lewis Evans & Arthur Grimes & Bryce Wilkinson, 1996. "Economic Reform in New Zealand 1984-95: The Pursuit of Efficiency," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1856-1902, December.
    2. repec:sae:niesru:v:142:y::i:1:p:75-87 is not listed on IDEAS
    3. Stewart, Mark B, 1990. "Union Wage Differentials, Product Market Influences and the Division of Rents," Economic Journal, Royal Economic Society, vol. 100(403), pages 1122-1137, December.
    4. Robert Kornfeld, 1993. "The Effects of Union Membership on Wages and Employee Benefits: The Case of Australia," ILR Review, Cornell University, ILR School, vol. 47(1), pages 114-128, October.
    5. David Metcal & Simon Milner, 1992. "Final Offer Arbitration in Great Britain: Style and Impact," National Institute Economic Review, National Institute of Economic and Social Research, vol. 142(1), pages 75-87, November.
    6. John Pencavel, 1996. "The Legal Framework for Collective Bargaining in Developing Economies," Working Papers 97008, Stanford University, Department of Economics.
    7. Lawrence Mishel, 1986. "The Structural Determinants of Union Bargaining Power," ILR Review, Cornell University, ILR School, vol. 40(1), pages 90-104, October.
    8. Oliver E. Williamson, 1968. "Wage Rates as a Barrier to Entry: The Pennington Case in Perspective," The Quarterly Journal of Economics, Oxford University Press, vol. 82(1), pages 85-116.
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    Cited by:

    1. Tse, Chung Yi, 2000. "Monopoly, human capital accumulation and development," Journal of Development Economics, Elsevier, vol. 61(1), pages 137-174, February.
    2. Bruno Chiarini & Massimo Giannini, 2000. "A Model Of Union Behaviour And Benefits Under Uncertainty - Did Thatcher'S Benefits Policy Increase Employment And Reduce Union Power?," Working Papers 5_2000, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.

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