Heterogeneous Impacts of the Decentralization of Collective Bargaining (original) (raw)
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The incidence and effects of decentralized wage bargaining in Finland
Journal of labor research, 2024
There was a strong push from employers to decentralize wage setting in Finland in the early 2000s. We analyze the incidence of decentralization and its effect on the level and dispersion of wages by using nationally representative panel data. The results show that wage setting was more likely decentralized in collective agreements where a high share of employees worked in manufacturing or real estate industries than in other industries, such as in education and human health and social work activities. Decentralization was, for the most part, quite short-lived. Using recent difference-indifferences methods that allow for heterogeneous treatment effects and differences in the timing of treatment, we show that decentralization had modest positive effects on the level and dispersion of wages in manufacturing.
The Decentralization of Wage Bargaining: Four Cases
The paper contributes to the discussion about the possible trends and processes towards decentralization of wage bargaining or wage setting within the OECD-countries since the 1970s. Based on a data set of 16 OECD countries from 1950 to 2000 our results show that in terms of bargaining level the trend is clear towards decentralization since the 1970s, even though there are important exceptions. In terms of confederal involvement the major decrease occurs among the Nordic countries and the Netherlands, whereas many of the other countries have had a status quo more or less. In terms of government involvement, however, the change is the almost non-existent. The overall tendency is still towards less centralisation, even though a number of countries have not changed or have moved in the opposite direction. Sweden, Denmark, UK and the Netherlands experience the largest decreases in decentralization overall. The processes of decentralization of wage bargaining look very differently in each country. It may occur through changes in the collective agreements themselves or through individual wage-setting outside the system of collective agreements. And the decentralization process may occur both in a context of cooperation between the labor-market organizations or in a setting of conflicts.
Collective versus decentralized wage bargaining and the efficient allocation of resources
Labour Economics, 2014
In a search model with two sided heterogeneity and on-the-job search, we compare collective bargaining agreements (CBA) with a decentralized bargaining outcome case. Under CBA, a union chooses a pay-scale schedule and the firm can select a wage from this pay scale after observing match quality. An advantage of collective bargaining agreements is that search and business-stealing externalities can be internalized. A disadvantage is that it takes more time before an optimal allocation is reached. What the most desirable system is, depends on worker bargaing power (β) and the relative efficiency of on-versus off-the job search. We find both for the Netherlands and the US that as long as β lies between 0.1 and 0.7, CBA is less desirable. * We thank NWO and the Dutch ministry of social affairs for a research grant.
Bargaining structure, wage determination, and wage dispersion in 6 OECD countries
2007
The paper examines the role of collective bargaining systems as a determinant of the inter-industry wage structure. It compares wage patterns of six countries: Austria, Canada, Germany, Norway, Sweden and the U.S.. We use comparable wage regressions from micro cross-sections data to calculate inequality in pay across sectors. Our findings suggest the following: First, high (low) wage sectors in one country tend to be high (low) wage sectors in others, irrespective of the (dis)similarity in labor market institutions. Second, differences in the amount of pay inequality are likely to be the result of differences in collective bargaining: more centralized bargaining structures tend to narrow pay differentials across industries.
2009
It is widely accepted within the field of labor economics that union membership has a positive effect on wages and that centralization of collective bargaining leads to lower wage dispersion. The question remains whether it is possible to change the wage structure by changing the collective bargaining agreement and decentralizing the bargaining process. A unique opportunity to explore this question presented itself when changes were made to collective bargaining contracts in the public sector in Iceland while the bargaining process was decentralized. In this paper I explore the effects of the decentralization on the wage structure.
Efficiency of collective bargaining
2009
It is widely accepted within the field of labor economics that union membership has a positive effect on wages and that centralization of collective bargaining leads to lower wage dispersion. The question remains whether it is possible to change the wage structure by changing the collective bargaining agreement and decentralizing the bargaining process.
Last trends on collective bargaining decentralization
LABOS Revista de Derecho del Trabajo y Protección Social
Decentralisation of collective bargaining has been one of the key trends concerning labour market regulation of the last decades. Most of European countries have developed – with different breath and scope – procedures and reforms to strengthen the company level of bargaining. The Great Recession has stressed this orientation, particularly in those countries which were under financial pressure. This paper focuses on the cases of four Mediterranean countries – France, Italy, Spain, and Portugal – in order to assess how decentralisation has been carried out and, most importantly, what kind of practical results have been achieved. On the base of these outcomes, it highlights how the debate concerning the structure ofcollective bargaining is changing from a black or white perspective to a new one in which mixed models are possible if the whole system is coordinated, taking into consideration the type of collective bargaining model set in the country.
Multi-employer bargaining under pressure Decentralisation trends in five European countries —
2019
Multi-employer bargaining has been under pressure in recent years from the dual impact of the economic crisis and government interventions in areas traditionally within the remit of social partner autonomy. Such pressure has impacted on both the structure of collective bargaining – notably the degree of coordination between different bargaining levels and across bargaining units – and its outcomes. This has resulted, among other things, in wage restraint and internal devaluation, as well as more concession bargaining at company level. The space for decentralised bargaining has increased even where bargaining systems remain strongly organised. The reforms introduced during the crisis have increased the number of options available to employers, thereby reinforcing their bargaining position vis-à-vis the unions, and have sometimes directly strengthened employers’ prerogatives to modify employment terms and conditions.
Centralized Wage Setting and Labor Market Policies: the Nordic Model Case
It is often argued that rigid labour market and centralized bargaining are harmful employment and growth. This paper looks at the case of Nordic countries as a counter-example pointing to some weaknesses of this view. Rigid labour markets, while reducing the offer of low quality jobs, increase average labor productivity by favoring job relocation in high quality jobs. Moene and Wallerstein (1997) adopted a vintage-capital model to compare centralized and decentralized bargaining: they show that centralized bargaining systems yield higher labor productivity and higher structural unemployment. By introducing a frictional labor market in the vintage-capital framework , we show that the negative effects on employment characterizing centralized bargaining can be reduced by adopting active labor market policy.