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Perverse effects of two-tier wage bargaining structures

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  • Tito Boeri

    (L'Università Commerciale Luigi Bocconi, Italy, and IZA, Germany)

Abstract

Debate over labor market flexibility focuses mainly on firing costs, while largely ignoring wage determination and the need for collective bargaining reform. Most countries affected by the euro debt crisis have two-tier bargaining structures in which plant-level bargaining supplements national or industrywide (multi-employer) agreements, taking the pay agreement established at the multi-employer level as a floor. Two-tier structures were intended to link pay more closely to productivity and to allow wages to adjust downward during economic downturns, while preventing excessive earning dispersion. However, these structures seem to fail precisely on these grounds.

Suggested Citation

  • Tito Boeri, 2015. "Perverse effects of two-tier wage bargaining structures," IZA World of Labor, Institute of Labor Economics (IZA), pages 101-101, January.
    • Handle: RePEc:iza:izawol:journl:y:2015:n:101
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    References listed on IDEAS

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    Cited by:

    1. Claudio Lucifora & Daria Vigani, 2021. "Losing Control? Unions’ Representativeness, Pirate Collective Agreements, and Wages," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(2), pages 188-218, April.
    2. Manudeep Bhuller & Karl Ove Moene & Magne Mogstad & Ola L. Vestad, 2022. "Facts and Fantasies about Wage Setting and Collective Bargaining," Journal of Economic Perspectives, American Economic Association, vol. 36(4), pages 29-52, Fall.
    3. Marianna Belloc & Paolo Naticchioni & Claudia Vittori, 2023. "Urban wage premia, cost of living, and collective bargaining," Journal of Economic Geography, Oxford University Press, vol. 23(1), pages 25-50.
    4. Ester Faia & Vincenzo Pezone, 2024. "The Cost of Wage Rigidity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 301-339.
    5. Dale-Olsen, Harald, 2019. "Creative Destruction, Social Security Uptake and Union Networks," IZA Discussion Papers 12546, Institute of Labor Economics (IZA).
    6. repec:spo:wpmain:info:hdl:2441/3mjt8d63i195voq228mf1sr91q is not listed on IDEAS
    7. Ronchi, Maddalena & di Mauro, Filippo, 2017. "Wage bargaining regimes and firms' adjustments to the Great Recession," Working Paper Series 2051, European Central Bank.
    8. Dale-Olsen, Harald, 2018. "Wages, Creative Destruction, and Union Networks," IZA Discussion Papers 11894, Institute of Labor Economics (IZA).
    9. E. Gautier & D. Fougère & S. Roux, 2016. "The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France," Working papers 587, Banque de France.
    10. Mr. Alvar Kangur, 2018. "Competitiveness and Wage Bargaining Reform in Italy," IMF Working Papers 2018/061, International Monetary Fund.
    11. repec:hal:spmain:info:hdl:2441/3mjt8d63i195voq228mf1sr91q is not listed on IDEAS
    12. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.
    13. Cardullo, Gabriele, 2024. "Slouching Towards Decentralization. An Equilibrium Approach for Collective Bargaining," IZA Discussion Papers 16870, Institute of Labor Economics (IZA).
    14. Fougère, Denis & Gautier, Erwan & Roux, Sébastien, 2018. "Wage floor rigidity in industry-level agreements: Evidence from France," Labour Economics, Elsevier, vol. 55(C), pages 72-97.
    15. Denis Fougère & Erwan Gautier & Sébastien Roux, 2016. "The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France," Working Papers hal-03469977, HAL.
    16. Faia, Ester & Pezone, Vincenzo, 2018. "The Cost of Wage Rigidity," CEPR Discussion Papers 13407, C.E.P.R. Discussion Papers.
    17. Fougère, Denis & Gautier, Erwan & Roux, Sébastien, 2016. "Understanding Wage Floor Setting in Industry-Level Agreements: Evidence from France," IZA Discussion Papers 10290, Institute of Labor Economics (IZA).
    18. Tito Boeri & Juan F. Jimeno, 2015. "The unbearable divergence of unemployment in europe," Working Papers 1534, Banco de España.
    19. Denis Fougère & Erwan Gautier & Sébastien Roux, 2016. "The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France," SciencePo Working papers Main hal-03469977, HAL.

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    More about this item

    Keywords

    wage drift; favorability principle; productivity-related pay; multi-employer bargaining;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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