Wage Dispersion and Decentralization of Wage Bargaining

TY - UNPB

T1 - Wage Dispersion and Decentralization of Wage Bargaining

AU - Dahl, Christian M.

AU - Le Maire, Christian Daniel

AU - Munch, Jakob Roland

N1 - JEL Classification: J31, J51, C23

PY - 2009

Y1 - 2009

N2 - This paper studies how decentralization of wage bargaining from sector to firm level influences wage levels and wage dispersion. We use a detailed panel data set covering a period of decentralization in the Danish labor market. The decentralization process provides exogenous variation in the individual worker's wage-setting system that facilitates identification of the effects of decentralization. Consistent with predictions we find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems. However, the differences across wage-setting systems are reduced substantially when controlling for unobserved individual level heterogeneity.

AB - This paper studies how decentralization of wage bargaining from sector to firm level influences wage levels and wage dispersion. We use a detailed panel data set covering a period of decentralization in the Danish labor market. The decentralization process provides exogenous variation in the individual worker's wage-setting system that facilitates identification of the effects of decentralization. Consistent with predictions we find that wages are more dispersed under firm-level bargaining compared to more centralized wage-setting systems. However, the differences across wage-setting systems are reduced substantially when controlling for unobserved individual level heterogeneity.

KW - Faculty of Social Sciences

KW - panel data quantile regression

M3 - Working paper

SP - 25

BT - Wage Dispersion and Decentralization of Wage Bargaining

PB - Department of Economics, University of Copenhagen

ER -