The Costs and Benefits of Various Wage Bargaining Structures An Empirical Exploration

35 Pages Posted: 15 Feb 2006

See all articles by Alun H. Thomas

Alun H. Thomas

International Monetary Fund (IMF) - European Department

Date Written: April 2002

Abstract

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.

Keywords: Wage bargaining unemployment internal factors

JEL Classification: J30 J31 J51

Suggested Citation

Thomas, Alun, The Costs and Benefits of Various Wage Bargaining Structures An Empirical Exploration (April 2002). IMF Working Paper No. 02/71, Available at SSRN: https://ssrn.com/abstract=879575

Alun Thomas (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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