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Reflections on wage-setting

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  • Zimmermann, Klaus F.

Abstract

Central banks need to be concerned about wages since they are a major driver of inflation. Rising wages are needed to signal directions for market adjustments to ensure growth. Wage growth is driven by relative scarcity, labor productivity and expectations about inflation and future growth. Migration plays a significant role to balance wages across regions and countries. Wage growth has been low in most developed economies because of underutilized labor if properly measured. Germany seems to be an exception, but the scarcity of workers has been tamed by internal flexibility resulting from more decentralized wage setting and labor market reforms.

Suggested Citation

  • Zimmermann, Klaus F., 2018. "Reflections on wage-setting," GLO Discussion Paper Series 230, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:230
    as

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    File URL: https://www.econstor.eu/bitstream/10419/180664/1/GLO-DP-0230.pdf
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    References listed on IDEAS

    as
    1. Julia Jauer & Thomas Liebig & John P. Martin & Patrick A. Puhani, 2019. "Migration as an adjustment mechanism in the crisis? A comparison of Europe and the United States 2006–2016," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 1-22, January.
    2. Ulf Rinne & Klaus F Zimmermann, 2013. "Is Germany the North Star of Labor Market Policy?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(4), pages 702-729, December.
    3. Karl BRENKE & Ulf RINNE & Klaus F. ZIMMERMANN, 2013. "Short-time work: The German answer to the Great Recession," International Labour Review, International Labour Organization, vol. 152(2), pages 287-305, June.
    4. Bell, David N.F. & Blanchflower, David G., 2018. "The lack of wage growth and the falling NAIRU," National Institute Economic Review, National Institute of Economic and Social Research, vol. 245, pages 40-55, August.
    5. repec:hal:spmain:info:hdl:2441/7k0plsobem9tuo09eg04jujb9a is not listed on IDEAS
    6. Pierre Cahuc & Stéphane Carcillo & Ulf Rinne & Klaus Zimmermann, 2013. "Youth unemployment in old Europe: the polar cases of France and Germany," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    7. Bewley, Truman F., 1998. "Why not cut pay?," European Economic Review, Elsevier, vol. 42(3-5), pages 459-490, May.
    8. Ulf Rinne & Klaus Zimmermann, 2012. "Another economic miracle? The German labor market and the Great Recession," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Phillips-curve; wages; union wages; decentralized wage bargaining; labor market reforms; internal flexibility; unemployment; underemployment; mobility and wages;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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