Wage Centralization, Union Bargaining, and Macroeconomic Performance

Wage Centralization Union Bargaining and Macroeconomic Performance This paper addresses two questions First under what circumstances will a centralized wage bargaining system offer higher output and employment than a decentralized system Second what is the relation

  • Title: Wage Centralization, Union Bargaining, and Macroeconomic Performance
  • Author: James McHugh
  • ISBN: 9781282056664
  • Page: 150
  • Format: ebook
  • This paper addresses two questions First, under what circumstances will a centralized wage bargaining system offer higher output and employment than a decentralized system Second, what is the relationship between the degree of wage centralization and inflation The paper argues that centralized wage setting may offer worse outcomes, despite the existence of a negative coThis paper addresses two questions First, under what circumstances will a centralized wage bargaining system offer higher output and employment than a decentralized system Second, what is the relationship between the degree of wage centralization and inflation The paper argues that centralized wage setting may offer worse outcomes, despite the existence of a negative coordination externality in decentralized wage setting This is likely to occur when the legal and institutional environment strengthens the bargaining position of the union in the centralized regime compared with unions operating in a decentralized regime Further, as product markets become competitive, the macroeconomic outcomes in both regimes converge, and the degree of wage centralization becomes irrelevant.

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