40 Pages Posted: 11 Dec 2011
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.
Keywords: wage bargaining, decentralization, wage dispersion
JEL Classification: J31, J51, C23
Suggested Citation: Suggested Citation
Dahl, Christian M. and le Maire, Daniel and Munch, Jakob Roland, Wage Dispersion and Decentralization of Wage Bargaining. IZA Discussion Paper No. 6176. Available at SSRN: https://ssrn.com/abstract=1970771