Bargaining Structure and Nominal Wage Flexibility
2002 (English)Report (Other academic)
In a model with hetergenous agents, wage setting by monopoly unions and monetary policy conducted by a central bank, we show that the duration of nominal wage contracts is u-shaped in the degree of centralization, with intermediate bargaining systems yielding contracts of shorter duration and thus more flexible nominal wages than both decentralized and centralized systems. We also find the degree of heterogeneity in the economy. The theoretical predictions of the model are tested on OECD data. There is empirical support for the main results regarding contract length, while there is less support for the predictions regarding the level of centralization.
Place, publisher, year, edition, pages
Stockholm: IIES , 2002. , 45 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University. (Online), ISSN 1653-610X ; 709
nominal wage flexibility, contract length, bargaining structure, monteray policy
IdentifiersURN: urn:nbn:se:su:diva-42024OAI: oai:DiVA.org:su-42024DiVA: diva2:343725