The Costs and Benefits of Various Wage Bargaining Structures: An Empirical Exploration
April 1, 2002
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Summary
The literature on the relationship between the unemployment rate and wage bargaining fails to separate the offsetting effects of a reduction in competition associated with centralized bargaining and the increased awareness of unemployment externalities. This paper uses OECD data to distinguish these effects. While wages have become more sensitive to changes in the unemployment rate in countries that have switched to centralized wage-bargaining arrangements, the industry wage is not particularly sensitive to internal factors (relative price and productivity shifts) in economies with centralized/industry-level bargaining arrangements. The latter effect dominates in terms of persistently high unemployment and weaker growth.
Subject: Labor, Real wages, Unemployment rate, Wage adjustments, Wage bargaining, Wages
Keywords: coefficient estimate, dispersion index, growth rate, internal factors, labor market, market power, real wage restraint, Real wages, standard error, unemployment, Unemployment rate, utility function, Wage adjustments, Wage bargaining, Wages, WP
Pages:
35
Volume:
2002
DOI:
Issue:
071
Series:
Working Paper No. 2002/071
Stock No:
WPIEA0712002
ISBN:
9781451849257
ISSN:
1018-5941
