Wage Centralization, Union Bargaining, and Macroeconomic Performance
Wage Centralization, Union Bargaining, and Macroeconomic Performance

Author: Mr.James McHugh

Publisher: INTERNATIONAL MONETARY FUND

Published: 2002-08-01

Total Pages: 0

ISBN-13: 9781451856354

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This paper addresses two questions. First, under what circumstances will a centralized wage-bargaining system offer higher output and employment than a decentralized system? Second, what is the relationship between the degree of wage centralization and inflation? The paper argues that centralized wage setting may offer worse outcomes, despite the existence of a negative coordination externality in decentralized wage setting. This is more likely to occur when the legal and institutional environment strengthens the bargaining position of the union in the centralized regime compared with unions operating in a more decentralized regime. Furthermore, as product markets become more competitive, the macroeconomic outcomes in both regimes converge, and the degree of wage centralization becomes irrelevant.

Wage Bargaining Centralization and Macroeconomic Performance
Wage Bargaining Centralization and Macroeconomic Performance

Author: Enrique Fatas

Publisher:

Published: 2001

Total Pages: 0

ISBN-13:

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This paper experimentally analyzes the effect of wage bargaining centralization (WBC) on macroeconomic performance. Our theoretical benchmark comes from that developed by Cukierman and Lippi (1999) to investigate the joint effects of monetary policy and labor market institutions on unemployment and inflation. We focus on the implications of two well known effects related to the degree of WBC: the competitive effect and the strategic effect. To do so we established a simple wage setting mechanism based on the existence of assorted levels of WBC measured by the number of unions in the labor market. In the three control treatments, unions' welfare and monetary rewards depend only on unemployment and wages, so wage pressures are expected to diminish with the level of centralization. In the other three treatments (the strategic treatments) subjects tackle both the competitive and the strategic effect as the rate of inflation affect union's utility and subject's experimental rewards. Our results show that (i) as wages are significantly higher in the control treatments than in the strategic ones, the strategic effect seems to work in the way described by our theoretical model; (ii) nevertheless, the strategic effect does not fully operate according to the theoretical forecast, as lower levels of WBC, for which competitive effect dominates, offer a better macroeconomic performance.

Collective Bargaining and Wage Formation
Collective Bargaining and Wage Formation

Author: Hannu Piekkola

Publisher: Springer Science & Business Media

Published: 2005-12-06

Total Pages: 190

ISBN-13: 3790815985

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Hannu Piekkola and Kenneth Snellman ETLA, The Research Institute of the Finnish Economy, Helsinki, Finland The Labour Institute for Economic Research, Helsinki, Finland 1 The Basic Issues Wages have traditionally been agreed on collectively in Europe. The articles in this volume examine the current state of collective bargaining as well as the ch- lenges it is currently facing. The issues examined in these papers have a wide applicability to problems on the European labour markets. Torben M. Andersen and Steinar Holden review challenges from globalisation and inter-industry trade and the adaptation to a low-inflation environment. The other contributions are part of the project investigating collective bargaining in Finland, carried out by ETLA (the Research Institute of the Finnish Economy) and the Labour Institute for E- nomic Research. Some of them use results from a Finnish survey carried out by the two institutes ETLA and the Labour Institute on the views of employers and employees about labour relations and the labour market negotiation system. Bargaining systems are complex and their future development depends on their historical evolution, recent and past experiences, and the current situation in the labour market, as well as changes in the international environment. By examining the past functioning of the bargaining system one can observe how different e- ments in it have interacted with various factors in the environment of the system.

The Centralization of Wage Bargaining Revisited
The Centralization of Wage Bargaining Revisited

Author: John Driffill

Publisher:

Published: 2006

Total Pages: 0

ISBN-13:

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The original article with Lars Calmfors predicted that highly coordinated or centralized bargaining would lead to wage restraint and low unemployment. Despite shortcomings, this prediction has survived scrutiny. Recent work suggests that collective bargaining should be seen as part of broader research on institutions and macroeconomic performance in growth.

Industrial Relations and Macroeconomic Performance
Industrial Relations and Macroeconomic Performance

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 1990-10-01

Total Pages: 42

ISBN-13: 1451951094

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The paper analyzes the macroeconomic implications of different systems of industrial relations. After reviewing the relevant literature, and analyzing cross-country evidence, the paper focuses on the experience of centralized bargaining characterizing Spain in the period 1979-86. The paper argues, in accordance with the literature and the cross-country evidence, that the centralization of bargaining yielded positive macroeconomic effects in Spain, and thus that the shift toward a more decentralized setting after 1987 carries several risks. This conclusion is based on an empirical analysis of the wage setting process and of the evolution of labor shares in income.