Decentralized Public Sector Wage Determination: Wage Curve and Wage Comparison for Norwegian Teachers in the Pre‐WW2 Period

The recent trend towards decentralization of European public sector wage determination relaxes some of the central administered wage setting mechanisms developed in the post‐WW2 period. This paper discusses teacher wage determination in Norway in 1905–39, a period with a highly decentralized public sector wage formation. Separate wage equations for urban and rural areas are estimated. I find that the responsiveness to unemployment of the urban wage was of the same magnitude as in the post‐WW2 period private sector wage formation. In addition, the internal teacher labour market and local economic conditions influence the wage level. The rural wage mainly followed the urban wage.