Four papers on wage formation in a unionized economy (original) (raw)
Unionization and the Evolution of the Wage Distribution in Sweden: 1968 to 2000
ILR Review, 2011
Unionization and the Evolution of the Wage Distribution in Sweden: 1968 to 2000 * We examine the evolution of the Swedish wage distribution over the periods 1968-1981 and 1981-2000. The first period was the heyday of the Swedish solidarity wage policy with strongly equalization clauses in the central wage agreements. During the second period, there was more scope for firm-specific factors to affect wages. We find a remarkable compression of wages across the distribution in the first period, but in the second period, wage growth was quite uniform across the distribution. We decompose these changes across the distribution into two components-those due to changes in the distribution of characteristics such as education and experience and those due to changes in the distribution of returns to those characteristics. The wage compression between 1968 and 1981 was driven by changes in the distribution of returns, but between 1981 and 2000, the change in the distribution of returns was neutral with respect to inequality.
Wage formation and labour market antagonism
2019
Economic inequality is a problem of global concern and labour unions may have an equalising effect on gender wage-differentials. In Sweden, the gender-wage differentials underwent a significant decline between 1960 and 1980s but had despite the early progress of equalising almost stopped, near to no progress have occurred since then. The Swedish labour unions are attributed to have impacted the early development and diminish, which cause one to wonder if they are behind the halt. There is an abundance of research arguing for the correlation between the presence of women and equal outcome, a correlation that is absent in the Swedish case of wage formation. In order to clarify the paradox and contribute to existing research, this thesis approached the matter from the angle of insider-outsiders and the theory of split labour markets. Moreover, the thesis has analysed how the labour union agenda change in response to economic and political impact mechanisms and aimed to understand what the politics of presence fail to explain, why organisations implement gender equalising policies in times of low women presence while turning inwards and dismissing equalising policies in times of high women presence. Through process tracing the thesis unveiled how economic and political mechanisms change the behaviour of labour unions, and the findings indicate that economic circumstances form the boundaries in which labour unions form their agenda. The findings indicate that high economic growth is a premise for equalising policies, while recession created an environment in which solidarity is neglected.
Institutions, Incentives and Trade Union Membership
Labour, 1997
The study investigates the determinants of unionization in a country -Finland -where union density, defined as the number of unionized members divided by the labour force, has risen 60 percentage points in 32 years, from 22 percent in 1960 to 82 percent in 1992. The theoretical framework of the study is based on the background information obtained from surveys inquiring why individuals join a union. The empirical analysis for the period 1962-92 shows that the model is capable of explaining long-run trends in union density in a very satisfactory manner. The results imply that institutional features of the labour market, characterized by the benefit mark-up variable and a dummy variable capturing labour legislation and public policy toward unionization, play an important role in the development of union density. An interesting policy implication of the study is the prediction that union density would fall considerably if earnings-related unemployment allowances were to be cut to the level of the basic unemployment allowances.
The Impact of Union Status on Wages
Among other factors such as the employer’s willingness and ability to pay employees, as well as the employee’s acceptance rate, the important institutional role played by labour organizations has been identified through existing empirical literature. This paper estimates the impact of union status on wages, while looking to other possible factors of wage determination, specifically, educational attainment levels and the province of residence. The results suggest that union status has a positive effect on wages, and that this effect is both economically and statistically significant. This effect holds even when accounting for educational attainment and province of residence. In addition, the findings also suggest that there is a positive relationship between educational attainment and wage. It is important to note that there are potential issues of endogeneity, such as with unionization itself, as well as omitted variable bias, as it is difficult to include or measure all the possible factors of the union wage effect.
Union Density in Norway and Sweden: Stability versus Decline
Nordic journal of working life studies, 2022
The aim is to explain why union density is not only considerably higher in the Ghent country Sweden than in non-Ghent Norway but also why it has declined much more in Sweden, in particular among blue-collar workers. We show how changes to Swedish unemployment insurance in 2007-2013 were followed by a decline in union density and how white-collar unions were more successful than blue-collar unions in developing supplementary income insurance schemes that counteracted membership losses. This type of institutional explanation is nevertheless insufficient. In Norway, too, blue-collar density has decreased while white-collar workers have maintained their density rate. Norwegian data further show that even without unemployment insurance funds, it is possible to achieve a fairly high union density at workplaces with collective agreements. However, without unemployment benefits like we find in Sweden, it is increasingly challenging to establish an institutional foundation for a social custom of unionization.
Union Wage Effects: Does Membership Matter?
The Manchester School, 2000
Using a matched employer^employee data set for Norway, we exploit rare information on the union status of both individual employees and their workplaces. We establish two key results. First, we ¢nd a positive e¡ect of workplace trade union density on the level of the individual's pay in establishments covered by collective agreements. Second, we ¢nd that, conditioning on coverage, the individual union membership di¡erential disappears after controlling for establishment-level union density. The union wage e¡ect is therefore a pure public good, with individual membership conveying a positive wage externality.
Evolution of Union Wages and Determinants
SSRN Electronic Journal
economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.
Trade Unions in the Nordic Labor Market Models – Signs of Erosion? Introduction to the Special Issue
Nordic Journal of Working Life Studies, 2022
The Nordic countries are known for being small open economies with large public sectors due to universal welfare states and high living standards across occupations and education levels. This combination has recently been characterized as a balanced growth model in which both exports and internal demand (private and public) contributes to economic growth. In contrast to export-led growth models – as seen in Germany – which have starved wages and thus internal demand to increase the cost competitiveness of the export sector (Baccaro & Pontusson 2016), the Nordic countries seem to be able to do both (Alsos et al. 2019). In 2013, The Economist proclaimed Nordic countries as the world’s next ‘supermodel’ due to the emphasis on market dynamics and income security rather than job tenure – a useful blueprint for labor market policy configured for the rapid technological changes foreshadowed in the twenty-first century (Wooldridge 2013).In more recent years, the OECD has linked the flexibil...
Trade Unionism and Compensation Dynamics: A Research Overview
Ushus: Journal of Management, 2018
Over the years, government's enacted laws and enunciated policies to provide for decent work life, guarantee minimum wages, cushion against rise in cost of living, ensure equal remuneration and deter employers from making unfair and arbitrary deductions from wages has led to a change in the impact trade unions had on wage determination. The present article discusses different aspects of trade union's role in wage and salary administration in terms of choices and options for trade unions, unions' impact on general wage levels, unions' impact in terms of spill-over effect, role of trade unions in wage and salary policies and practices and so on.
2002
Britain and Norway on the extent to which hourly wages of different groups of workers are sensitive to local labour market conditions. We focus on differences by union status. Our theoretical framework captures both a turnover-based efficiency wage mechanism and one originating in union-firm bargaining. Under fairly general conditions, we show that wages are less sensitive to local unemployment the higher is the bargaining power of the union. In accordance with this theoretical prediction, we find that the absolute value of the elasticity of wages with respect to unemployment is higher in the nonunion sector than in the union sector for all three countries. We interpret the evidence as giving support to an efficiency wage interpretation of the wage curve.
Collective bargaining as a tool to ensure a living wage. Experiences from the Nordic countries
Transfer: European Review of Labour and Research, 2019
To date the Nordic countries have not had a public debate on living wages, in contrast to many Anglo-Saxon countries. This does not mean, however, that the concept of a living wage is alien to them. In this article we examine whether wage-setting mechanisms in the Nordic countries promote and secure a living wage for all employees, and how trade unions have approached the concept of a living wage.
Bringing the Unions Back In: Wage Bargaining Coordination and Institutional Renewal in Sweden
ABSTRACT Declining unionizations rates and the decentralization of wage bargaining have reduced the importance of organized labour in the political process. For some, this decline seems irreversible and the best trade unions can hope for is to be co-opted by governments or employers in'devil's pacts'. Over the last few years, however, some European trade union confederations have sought to reverse this trend by enhancing interconfederal coordination in wage bargaining demands.
Union Wage Setting, Employment and Investment: a Survey of Theory and Empirical Evidence
Labour, 1991
Abstrucr. This paper provides a survey of recent theoretical and empirical research on union wage setting, employment and investment. The basic models of union wage setting and employment are presented in a unified framework. The distinction between insiders and outsiders is introduced as an extension of the basic models. Empirical evidence on union preferences and on the performance of the various models is accessibly ordered. Finally, attention is paid to the effects of strategic behaviour between union and firm on wages, employment and investment. LABOUR 5 (3): 25-61 (1991) J.E.L. J41
Economic and Industrial Democracy, 2011
This article analyses how the introduction of variable pay systems (VPS) has affected the role of trade unions and collective bargaining in company pay setting, and the role of these institutions in shaping VPS in Norwegian companies in blue-collar machinery production and white-collar banking services. The development of VPS has been fairly smoothly handled by the actors within, and with the help of, the established industrial relations institutions. In the machinery companies, VPS implied minimal changes in collective bargaining, whereas in banking significant individualization and more ambiguous effects for the role of company unions in pay setting were found.
The Role of the Trade Unions in Social Restructuring in Scandinavia in the 1990s
Revue française des affaires sociales, 2003
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Why Unions Reduce Wage Inequality, II: The Relation between Solidarity and Unity
RePEc: Research Papers in Economics, 2015
This paper demonstrates that the decisions by workers of different skills to unite to form industry unions is closely linked to the egalitarian wage policies that such unions pursue. These results help interpret the stylized facts about unions: that they not only increase wages but also reduce wage inequality. I also demonstrate that political caps on collectively negotiated minimum wages may reduce the wages of all blue-collar workers (cf. "internal devaluation"), but that they may also cause unions to disintegrate in the long run.
Wage and Employment Determinants under Trade Unionism: The InternationalTypographical Union
1980
This paper represents the first empirical application of a model of trade union behavior that has been discussed in the literature for over thirty years. The wages and employment o typographers are examined to see whether they can be usefully characterized as the outcome of a process by which the union maximizes an objective function containing wages and employment and is constrained by a trade-off between these two variables as represented by the employer's labor demand function. Our functional form assumptions permit investigation of some familiar special cases of union behavior. We find the parameter implications of both the wage bill maximization hypothesis and the rent maximization hypothesis to provide inferior explanations of the movement of wages and employment of these workers compared with our more general formulation.