Wage Drift: Phillips Curve vs Bargaining Models

ABSTRACT: The purpose of this paper is to shed light on the debate on market- versus bargaining-determined total earnings by examining whether models of wage drift based on wage-bargaining considerations empirically outperform models based on simple ad hoc formulations relating wage drift to excess demand for labour. The task is carried out by investigating the empirical performance of two bargaining models and two Phillips curve models in the context of data on the Finnish metal industry. The results suggest that the former perform better than the latter, thus providing support for the hypothesis that total earnings are bargaining-determined. Furthermore, the results are in line with the view that the superiority of wage-bargaining models is not only theoretical but also empirical.     

Union Bargaining,Wage Differentials and Employment

Abstract. Reviewing empirical studies concerning the corporatism-flexibility-performance nexus the paper discusses decentralized and centralized bargaining systems. Revenue pay systems, concession bargaining and two-tier wage systems as means to enhance wage flexibility at the firm level are also considered. Both theoretical and empirical evidence is presented, showing that unions are bargaining for greater employment security for the already employed (the insiders). In return, unions are ready to accept greater wage flexibility and even wage decreases. By contrast, the insider-outsider theory does suggest how unions may accentuate involuntary unemployment, because there may be ways in which a union can help to raise the wages of the insiders without reducing their chances of continued employment.     

Subsidies on Labour and Capital under Wage Bargaining

ABSTRACT: Micro-policy instruments are often grouped into labour subsidies and capital subsidies. The purpose of this paper is to investigate the effect on employment of labour and capital subsidies when the wage rate is endogeneous. The problem is studied within a sequential three-stage model, integrating the investment decision, wage-bargaining and the employment decision. The paper demonstrates that labour subsidies may fail, depending on technology and the risk aversion of the workers.     

Bargaining Power and Wage Determination: The Role of Outside Options

ABSTRACT: The paper analyses the wage bargaining process between an entrepreneur and his workforce when delays in agreement intrinsically reduce the amount of returns to be shared It is shown that the outside options of the workforce and the entrepreneur can be a systematic determinant of their bargaining power in contrast to what the Rubinstein (1982) model predicts The basic model is extended to analyse: (i) bargaining under multiple unionism; (ii) the- possible relationship between bargaining and efficiency wages; and (iii) under investment in workforce training.     

Welfare Effects of Local versus Central Wage Bargaining

The paper analyses the welfare effects of union bargaining (de)centralization in a dual labour market with a unionized and a competitive sector. We show that social welfare depends on both the structure of the union's objective function and the elasticities of labour demand in both sectors. The welfare‐maximizing employment allocation can be obtained under a high degree of centralization if the union maximizes the total wage‐bill. Otherwise, if the union is rent maximizing, welfare is higher under local bargaining. However, in that case neither central nor local wage setting yields the social optimum.     

Wage Structure,Incomes Policy and Decentralised Bargaining: the Case of Greece

Abstract. Developments in Greek industrial relations suggest that decentralised bargaining is not a panacea. The manufacturing wage structure in Greece has an exceptional course associated with the rise of informal decentralised bargaining. Interindustry wage differentials increased in a period of incomes policies aiming to narrow the wage structure. The influence exerted by inflation and unemployment is, compared to past evidence from the US. and the U.K., quite unconventional. Under informal bargaining, high-wage powerful industrial branches “benefit” from higher inflation and lower unemployment.     

Trade Unions,Wage Bargaining Coordination,and Foreign Direct Investment

Conventional wisdom is that a high trade union bargaining strength and a system of coordinated wage bargaining reduce the attractiveness of an economy as a location for foreign direct investment, although there is limited evidence for this. The paper takes panel data for 19 OECD economies to examine the relationship between trade union bargaining strength, bargaining coordi nation, and a range of incentives for inward foreign direct investment. It finds a strong negative effect of trade union density on inward foreign direct investment, which is dependent on the degree of wage bargaining coordination. A high degree of coordination weakens the deterrent effect of high union density, which is consistent with the notion that under certain circumstances a coordinated increase in wages can increase profits of the multinationals by hurting domestic firms.     

Public-Private Wage Differentials in French-Speaking Africa: A Comparative Analysis

Abstract. In the framework of structural adjustment programs implemented in Africa, the idea that wages in the public sector are too high compared to those of the private sector is partly based on wage policies with regard to the public sector. But the existence of public-wage differentials, inducing a labour market segmentation within the modern sector, has rarely been the object of attentive examination. With the help of earnings functions, based on homogeneous cross-section and logitudinal data of seven capitals of French-speaking Africa, the author plans to verify this hypothesis. The main conclusion of this research is that distortions on the modern labour market of many African countries are less important than one may think. In most of the countries considered, public-private wage gaps are essentially attributable to characteristics of individuals. This suggests that policies aiming to reduce wages of the public sector are no longer justifiable, economically and socially.     

Behavioral Identification in Coalitional Bargaining: An Experimental Analysis of Demand Bargaining and Alternating Offers

Alternating‐offer and demand bargaining models of legislative bargaining make very different predictions in terms of both ex ante and ex post distribution of payoffs, as well as in the role of the order of play. The experiment shows that actual bargaining behavior is not as sensitive to the different bargaining rules as the theoretical point predictions, whereas the comparative statics are in line with both models. We compare our results to studies that attempt to distinguish between these two approaches using field data, finding strong similarities between the laboratory and field data regardless of the underlying bargaining process.     

Wage Bargaining with On‐the‐Job Search: Theory and Evidence

Most applications of Nash bargaining over wages ignore between‐employer competition for labor services and attribute all of the workers' rent to their bargaining power. In this paper, we write and estimate an equilibrium model with strategic wage bargaining and on‐the‐job search and use it to take another look at the determinants of wages in France. There are three essential determinants of wages in our model: productivity, competition between employers resulting from on‐the‐job search, and the workers' bargaining power. We find that between‐firm competition matters a lot in the determination of wages, because it is quantitatively more important than wage bargaining à la Nash in raising wages above the workers' “reservation wages,” defined as out‐of‐work income. In particular, we detect no significant bargaining power for intermediate‐ and low‐skilled workers, and a modestly positive bargaining power for high‐skilled workers.     

The Effect of Legislated Minimum Wage Increases on Employment and Hours: A Dynamic Analysis

We present a dynamic policy simulation analysing what would have happened to wages, employment, and total hours had the federal minimum wage increased in September 1998, a year after the last actual increase in our data. Prior work suggests that employment responses take 6 years to play out. Using a time‐series model for 23 low‐wage industries, we find a positive response of average wages over 54 months following an increase in the minimum wage, but neither employment nor hours can be distinguished from random noise. Ignoring confidence intervals, the adjustment of hours is complete after 1 year, the adjustment of employment after no more than two and one half years.     

基于ABC与EVA的产品盈利能力分析

产品盈利能力分析是产品组合决策的基础,而有效的盈利分析有赖于产品成本的准确性和完整性.作业成本法较传统成本法改善了所消耗资源成本的准确性,但没有考虑资源的占用,因此仍然是不完整的.通过将作业成本法和经济增加值结合起来分析产品的盈利能力,既考虑了成本的精确性,又保证了完整性,根据作业成本法和经济增加值的基本原理,提出了基于ABC与EVA的产品盈利能力分析模型,并给出了实例分析.     

Knowledge Spillovers and Wage Inequality: An Empirical Analysis of Dutch Manufacturing

The introduction of new technologies and technical change is associated mainly with high‐skilled and high‐wage workers. In addition, many studies have found a positive correlation between the introduction of new technologies and technical change and skill upgrading. In these studies no attention has been paid to spillovers from one sector to the other. In this paper we not only use measures of technical change but also knowledge spillovers to explain wage inequality in Dutch manufacturing in the period 1986–95. Using this more elaborate measure of technical change, our findings are twofold. First, we confirm that workers employed in knowledge‐intensive manufacturing sectors receive a higher wage than workers in less knowledge‐intensive sectors. Secondly, the wages paid to high‐skilled workers relative to low‐skilled workers in knowledge‐intensive sectors are higher than those in less knowledge‐intensive sectors. However, the coefficients using the elaborate measure of technological advancement are much lower and sometimes even insignificant. This suggests a premium for high‐skilled labour in sectors both applying and developing technology. But the wage premium is highest in technology‐developing sectors, as suggested by the measures used in previous studies.     

High Wage Workers and High Wage Firms

We study a longitudinal sample of over one million French workers from more than five hundred thousand employing firms. We decompose real total annual compensation per worker into components related to observable employee characteristics, personal heterogeneity, firm heterogeneity, and residual variation. Except for the residual, all components may be correlated in an arbitrary fashion. At the level of the individual, we find that person effects, especially those not related to observables like education, are a very important source of wage variation in France. Firm effects, while important, are not as important as person effects. At the level of firms, we find that enterprises that hire high-wage workers are more productive but not more profitable. They are also more capital and high-skilled employee intensive. Enterprises that pay higher wages, controlling for person effects, are more productive and more profitable. They are also more capital intensive but are not more high-skilled labor intensive. We find that person effects explain about 90% of inter-industry wage differentials and about 75% of the firm-size wage effect while firm effects explain relatively little of either differential.     

Bargaining and Reputation

The paper develops a reputation based theory of bargaining. The idea is to investigate and highlight the influence of bargaining ‘postures’ on bargaining outcomes. A complete information bargaining model a la Rubinstein is amended to accommodate ‘irrational types’ who are obstinate, and indeed for tractability assumed to be completely inflexible in their offers and demands. A strong ‘independence of procedures’ result is derived: after initial postures have been adopted, the bargaining outcome is independent of the fine details of the bargaining protocol so long as both players have the opportunity to make offers frequently. The latter analysis yields a unique continuous‐time limit with a war of attrition structure. In the continuous‐time game, equilibrium is unique, and entails delay, consequently inefficiency. The equilibrium outcome reflects the combined influence of the rates of time preference of the players and the ex ante probabilities of different irrational types. As the probability of irrationality goes to zero, delay and inefficiency disappear; furthermore, if there is a rich set of types for both agents, the limit equilibrium payoffs are inversely proportional to their rates of time preference.     

Employer Wage Differentials in Germany: A Comparative Note

The paper contributes to the growing empirical literature on employer wage differentials, presenting first estimates for West Germany and comparing them with recent findings from other studies for the USA, France and Denmark. The empirical results show that the variation of global employer wage differentials is comparatively low in West Germany and has remained stable during the first half of the 1990s. This low dispersion results from wage setting for blue‐collar workers, while cross‐country differences are negligible for white‐collar workers. Employer wage differentials have, however, become more important for the remuneration of West German blue‐collar workers during the period investigated.     

Price Effects of the Minimum Wage: A Survey Data Analysis for the German Construction Sector

Utilizing the link between employment and price changes as a result of minimum wages, we use firm‐level data to evaluate the effect of minimum wage introduction in the German construction sector. In East Germany we find significant positive price effects that exclude the possibility of rising employment. Rather, the results indicate the existence of a competitive sector‐specific labour market, and thus declining employment. In contrast, we cannot find any significant price reaction for West Germany. This suggests that the implemented minimum wage in West Germany is too low in comparison to the predominantly paid wages and is hence not binding.     

A Distributional Analysis of Public–Private Wage Differential in India

In this paper, we examine public–private wage differential among men in India across the entire wage distribution. We find that the raw wage gap between public and private sector is positive across the entire wage distribution in both urban and rural areas. A quantile regression‐based decomposition reveals that that the public sector workers enjoy a positive wage premium across the entire wage distribution in both urban and rural areas, although the magnitude of wage premium is smaller at the top quantiles.     

European competitiveness: Bargaining between boom and gloom

The newly-renamed European Union is in crisis from economic weakness and political claustrophia. Ralf Boscheck argues that, in addition to a suggested ‘New Founding Contract’, broad-based development of the EU requires that priority is given to adjusting competitive specialization and to centralizing political power. The management of internal and external bargaining is critical. per cent, and 19 per cent respectively. EUROSTAT (1994).