Wages, Taxes and the Utility-Maximizing Trade Union: A Confrontation With Norwegian Data

Hersoug, Tor; Kjaer, Knut N.; Rødseth, Asbjørn

doi:10.1093/oxfordjournals.oep.a041749

Cited by 18 publications

(3 citation statements)

References 11 publications

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“…The Scandinavian model fitted Norwegian and Swedish data for the 1960s fairly well, but in the mid‐1970s wages rose far in excess of the scope, and this was followed by a series of devaluations in the late 1970s and early 1980s. When searching for better micro‐foundations, Scandinavian economists turned to union bargaining models and estimated real wage equations ; see Hersoug, Kjær and Rødseth (1986), Calmfors (1990), Calmfors and Forslund (1991) and Holm, Honkapohja and Koskela (1994). Subsequent research on aggregate wage determination has been heavily influenced by the error‐correction approach , where a long‐run equilibrium relation between the wage share and unemployment is embedded in a statistical model of the dynamics; see Nymoen (1989), Calmfors and Nymoen (1990), Rødseth and Holden (1990), Johansen (1995), Holden and Nymoen (2002), Nymoen and Rødseth (2003), Forslund and Kolm (2004) and Bårdsen, Eitrheim, Jansen and Nymoen (2005).…”

Section: Introductionmentioning

confidence: 99%

Prices, Productivity and Wage Bargaining in Open Economies*

Forslund

Gottfries

Westermark

2008

Scandinavian J Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. According to the standard union bargaining model, unemployment benefits should have big effects on wages, but product market prices and productivity should play no role in the wage bargain. We formulate an alternative strategic bargaining model, where labour and product market conditions together determine wages. A wage equation is derived and estimated on aggregate data for the Nordic countries. Wages are found to depend on unemployment and the replacement ratio, but also on productivity, international prices and exchange rates. There is evidence of considerable nominal wage rigidity. Exchange rate changes have large and persistent effects on competitiveness. Terms of use: Documents in EconStor mayJEL codes: E52, F33, F41, J31, J51, J63, J64

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Section: Introductionmentioning

confidence: 99%

Prices, Productivity and Wage Bargaining in Open Economies*

Forslund

Gottfries

Westermark

2008

Scandinavian J Economics

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“…the locally wage increases above the central agreement) and skills. In contrast with those authors,Hersoug et al (1986) argue that central wage setters take the expected wage drift into account in the negotiations; andHolden (1998) finds that empirically there is little or no offsetting of the central increase in wage drift.2 Although their analysis is made under decreasing returns to scale, which implies that firms will be infinitesimal in order to have higher relative profits, their results remain valid with a technology with aggregate constant returns to scale but decreasing returns to scale for the inputs at the firm level.…”

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confidence: 66%

Relative wages, labor specialization and bargaining patterns

Sánchez-Losada¹

2001

Span Econ Rev

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The goal of this paper is to study the effects of centralized and decentralized bargaining patterns on wage inequality when there are two different types of labor, skilled and unskilled. We present two models where labor is specialized between firms, that is, there are two types of firms, each one employing one type of labor. We show that the revenue shares of the production factors in each type of firm and the union power are crucial determinants of the relative wage. In contrast, the relative expected wage is the same across models and bargaining patterns.

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“…At a given average tax rate, a rise in the marginal tax rate implies that the government absorbs a larger share of a wage increase. Hence, increasing wages becomes less attractive for the bargaining parties (see also Hersoug et al, 1986). Instead of looking for another job on the official labor market, the employee may seek work in the informal sector.…”

Section: Wage Formationmentioning

confidence: 99%