Pattern bargaining and wage leadership in a small open economy
2013 (English)In: Scandinavian Journal of Economics, ISSN 0347-0520, E-ISSN 1467-9442, Vol. 115, no 1, 109-140 p.Article in journal (Refereed) Published
Pattern bargaining with the tradables (manufacturing) sector as the wage leader is common in Europe. We question the conventional wisdom that such bargaining produces wage restraint. In our model, all forms of pattern bargaining give the same outcomes as uncoordinated bargaining under inflation targeting. Under a monetary union, wage leadership for the non-tradables sector is conducive to wage restraint, whereas wage leadership for the tradables sector is not. Comparison thinking might lead the follower to set the same wage as the leader. Such equilibria can arise when the leader sector is the smaller sector, and these can promote high employment.
Place, publisher, year, edition, pages
2013. Vol. 115, no 1, 109-140 p.
Comparison thinking, inflation targeting, monetary regimes, wage setting, E24, J50
IdentifiersURN: urn:nbn:se:su:diva-71459DOI: 10.1111/j.1467-9442.2012.01731.xISI: 000313805600007OAI: oai:DiVA.org:su-71459DiVA: diva2:484953