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This paper analyses the relationship between wage dispersion and firm size within a “two-tier” system of collective bargaining (firm bargaining and multi-employer…
This paper analyses the relationship between wage dispersion and firm size within a “two-tier” system of collective bargaining (firm bargaining and multi-employer bargaining levels). Collective bargaining has a decisive role in setting wages in Spain, and its regulation highly limits the possibility for smaller firms to negotiate their own collective agreement.
Based on the Spanish Structure of Earnings Survey 2006, 2010 and 2014, the authors use variance decomposition in order to deeply analyse the effect of bargaining level on wage dispersion and compare the value of each decile of the distribution of wages for the purposes of identifying the quantitative differences in wage compression.
In general, the outcomes positively linked firm size and firm bargaining to wage dispersion. However, if firm size is taken into account, the effect of firm bargaining is limited among small firm workers because this type of firm is not usually covered by firm bargaining. On the other hand, the time analysis allows observing a wage compression that follows different patterns depending on firm size, compressing the higher part of the distribution in case of small firms and the lower part in case of large firms. This should be explained by the fact that wage negotiation is dependent on firm size.
Firm size has determined firm adjustment strategies to face the recent economic crisis and allows to evaluate the impact that changes in collective bargaining can have on wage distribution
There is no research that has tried to analyse the relationship between wage dispersion and firm size in a context where collective bargaining is essential to understand the wage structure. Normally, firm size plays a decisive role in wage policy given that the capacity of a company to negotiate an agreement is closely linked to its size.
Purpose – Ascertaining the extent to which the generalized decline in union density, as well as the erosion in centralized bargaining structures and developments in other…
Purpose – Ascertaining the extent to which the generalized decline in union density, as well as the erosion in centralized bargaining structures and developments in other labor institutions, have contributed to rising within-country inequality.
Methodology – Econometric analysis of a newly developed dataset combining information on industrial relations and labor law, various dimensions of globalization, and controls for demand and supply of skilled labor for 51 Advanced, Central and Eastern European, Latin American, and Asian countries from the late 1980s to the early 2000s, followed by an analysis of 16 advanced countries over a longer time frame (from the late 1970s to the early 2000s).
Findings – In contrast to previous research, which finds labor institutions to be important determinants of more egalitarian wage or income distributions, the chapter finds that trade unionism and collective bargaining are no longer significantly associated with within-country inequality, except in the Central and Eastern European countries. These findings are interpreted as the result of trade unionism operating under more stringent structural constraints than in the past, partly as a result of globalization trends. In addition, despite much talk about welfare state crisis, welfare states, historically the result of labor's power and mobilization capacity, still play an important redistributive role, at least in advanced countries.
Practical implications – Union attempts at equalizing incomes by compressing market earnings seem ineffective and impractical in the current day and age. Unions should seek to increase the workers’ skill levels and promote an egalitarian transformation of the workplace. This type of “supply-side” egalitarianism is not a new strategy for unions, but is very much embedded in the unions’ DNA.
This chapter examines whether changes in return to education affect workers’ mobility between jobs. Employee panel data are used to study staff movement from the public…
This chapter examines whether changes in return to education affect workers’ mobility between jobs. Employee panel data are used to study staff movement from the public sector to the private sector or vice versa from 1995 to 2005. It is found that in line with the situation in other advanced economies, the wage structure in the public sector in Israel is more compressed than that in the private sector, for employees with similar characteristics and in general, and that the difference widened during the period reviewed. Hence, the findings support the contention that the public sector compensates employees less for their skills than does the private sector. In addition, it is found that during that period the return to education increased in the private sector by about 1 percentage point more than in the public sector. In an analysis of those who switched from one sector to the other, our findings imply that if the return to education changed at the same rate in both sectors, the probability of highly educated workers moving from the public sector to the private sector would be 5 percent lower, and the probability of highly educated workers moving from the private sector to the public sector would be 2 percent higher.
Discusses the short – and long‐term labour market policies needed in Czechoslovakia to achieve successfully the economic reforms envisaged in the current economic programme. Given the similarities with other Eastern European countries in economic transition, the policy implications of this analysis can be simply extended to other cases. Emphasizes that wage indexation, deregulation of the wage structure and facilitation of labour mobility are key short‐term measures; they increase the prospects of success not only of structural reform, but also of other macroeconomic policies aimed at controlling inflation. In the long term, reforming labour market institutions, especially those responsible for setting wages and unemployment compensation plans, must take priority in order to ensure that the labour market functions in harmony with the overall market environment. Concludes that unemployment will not cause significant fiscal strain, if dismissals of retired employees are made a priority, but that nonetheless open unemployment will be higher than the Government expects. Another conclusion refers to the adequacy of the wage indexation system to drive down inflationary expectations and to stimulate employment adjustments. However, warns about the practical enforcement of the wage policy and the distortionary effect of the minimum wage policy. With respect to labour mobility, breaking the link between provision of benefits and jobs is fundamental for ensuring more rapid adjustment in employment opportunities and the supply response.
The purpose of the paper was to establish the implications of globalisation for labour markets when efficiency wages create endogenous wage rigidity and to re‐examine the…
The purpose of the paper was to establish the implications of globalisation for labour markets when efficiency wages create endogenous wage rigidity and to re‐examine the credibility of the arguments that call for deregulation, more wage flexibility and less social protection in this context.
The role of efficiency wages is reviewed in the traditional international economics theory, new economic geography and the neo‐Schumpeterian perspective towards international competitiveness.
First, taking into account endogenous sources of wage rigidity has different implications for employment, inequality, regional growth convergence and the role of the welfare state in the context of international competitiveness, from those derived when assuming them away or taking them as imposed by labour market institutions. Second, policies that would substantially reduce social security or lead to cost‐cuts may have an adverse effect on effort and thus on productivity.
To the author's knowledge, this paper is the only review in the literature that concentrates on efficiency wages applied in international trade.
This paper addresses the scope and content of planning for vocational education, training and employment in developing countries. Its premiss is that, since planning uses…
This paper addresses the scope and content of planning for vocational education, training and employment in developing countries. Its premiss is that, since planning uses scarce resources, it should be engaged in as little as is necessary to maximize efficiency and economic growth. Although the premiss of the paper is the need to economize on scarce planning resources, minimalism will not necessarily mean less planning. Rather, planning will need to be better and, above all, more useful.
This paper examines the effects of union change in Britain on changes in earnings dispersion 1983–1995. We investigate not only the decline in union density but also the…
This paper examines the effects of union change in Britain on changes in earnings dispersion 1983–1995. We investigate not only the decline in union density but also the greater wage compression among unionised workers, as well as changes in union density across skill groups. For the private sector, we find that deunionisation accounts for little of the increase in earnings dispersion. What unions have lost on the swings (lower density), they have gained on the roundabouts (greater wage compression). But for the public sector we find strong effects, because unions are increasingly organising the more skilled. This change in the character of public sector unions means that they no longer reduce earnings variation nearly as much as they once did.
This article studies the evolution of the wage differentials between graduate (skilled) and non-graduate (unskilled) workers in several European countries from the…
This article studies the evolution of the wage differentials between graduate (skilled) and non-graduate (unskilled) workers in several European countries from the beginning of the 1990s to the beginning of this century. The starting point is that all European countries show a common increase in the relative supply of skilled workers but different evolution of wage differentials. Economics theory usually relates the evolution of wage differentials not only to relative supply but also to skill-biased technological progress. I complement this explanation providing a theoretical model of wage bargaining where wage differentials are determined also by labour market institutions. My empirical findings show that both technological progress and labour market institutions are important in the determination of wage differentials. As for the former, I find that differentials depend on the pace and intensity at which technological progress takes place. As for labour market institutions, their effect, though important, is not always straightforward. In fact, some aspects of institutions, like minimum wage and the duration of unemployment benefits, favour unskilled workers while other aspects, like bargaining power and replacement rates from unemployment benefits, may magnify the differences in outside options and actually increase wage differentials.
In this paper, we review the literature on pay variation (e.g., pay dispersion, pay compression, pay range) in organizations. Pay variation research has increased markedly…
In this paper, we review the literature on pay variation (e.g., pay dispersion, pay compression, pay range) in organizations. Pay variation research has increased markedly in the past two decades and much progress has been made in terms of understanding its consequences for individual, team, and organizational outcomes. Our review of this research exposes several levels-related assumptions that have limited theoretical and empirical progress. We isolate the issues that deserve attention, develop an illustrative multilevel model, and offer a number of testable propositions to guide future research on pay structures.