Wage Dispersion and Decentralization of Wage Bargaining
Christian M. Dahl
Department of Business and Economics
Daniel Le Maire
University of Copenhagen
Jakob Roland Munch
University of Copenhagen - Department of Economics; Center for Economic and Business Research (CEBR)
IZA Discussion Paper No. 6176
This paper studies how decentralization of wage bargaining from sector to firm-level influences wage levels and wage dispersion. We use detailed panel data covering a period of decentralization in the Danish labor market. The decentralization process provides variation in the individual worker's wage-setting system that facilitates identification of the effects of decentralization. We find a wage premium associated with firm-level bargaining relative to sector-level bargaining, and that the return to skills is higher under the more decentralized wage-setting systems. Using quantile regression, we also find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems.
Number of Pages in PDF File: 40
Keywords: wage bargaining, decentralization, wage dispersion
JEL Classification: J31, J51, C23
Date posted: December 11, 2011
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