We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
CENTRALISATION, EMPLOYMENT AND WAGE DISPERSION.
- Authors
Rowthorn, R.E.
- Abstract
The purpose of this paper is not to challenge fundamentally the ideas of Calmfors and Driffill but to extend their work in another direction. Calmfors and Driffill are basically concerned with aggregate variables like average wages and total employment, and do not consider wage differentials or other kinds of inequality within the employed workforce. Their computer simulations, assume that wage bargaining structures are always symmetrical in the sense that all employed workers have the same degree of organised power throughout the economy. This ensures that wages are always uniform, no matter how centralised or decentralised the bargaining structure. Such an outcome is at variance with the empirical evidence, which indicates that wage differentials are much larger in some countries than others, and that bargaining structures have a significant influence on the level of wage dispersion. The structure of the paper is as follows. First, some evidence on wage dispersion and employment in OECD countries is presented. This is followed by a brief discussion how wage differentials might be taken into account when evaluating employment performance. The paper then goes on to present a modified version of the original Calmfors-Driffill model of wage bargaining. Numerical simulations are used to show how this modified version can generate both a U-shaped relationship between employment and centralisation, together with the kind of sectoral inequalities actually observed in highly decentralised economies. The paper also considers the implications of modifying the conventional assumption that trade unions are motivated only by the pursuit of short-term material gain. It shows that even a partial modification of this assumption may lead to radically different outcomes. If long-term self-interest or genuine altruism leads unions to display a modest degree of concern for others, the bargaining structure may lose much of its importance as a causal factor in macro-economic p...
- Subjects
WAGE bargaining; EMPLOYMENT
- Publication
Economic Journal, 1992, Vol 102, Issue 412, p506
- ISSN
0013-0133
- Publication type
Article
- DOI
10.2307/2234288