Facts and Fantasies about Wage Setting and Collective Bargaining
AbstractIn this article, we document and discuss salient features of collective bargaining systems in the OECD countries, with the goal of debunking some misconceptions and myths and revitalizing the general interest in wage setting and collective bargaining. We hope that such an interest may help close the gap between how economists tend to model wage setting and how wages are actually set. Canonical models of competitive labor markets, monopsony, and search and matching all assume a decentralized wage setting where individual firms and workers determine wages. In most advanced economies, however, it is common that firms or employer associations bargain with unions over wages, producing collective bargaining systems. We show that the characteristics of these systems vary in important ways across advanced economies, with regards to both the scope and the structure of collective bargaining.
CitationBhuller, Manudeep, Karl Ove Moene, Magne Mogstad, and Ola L. Vestad. 2022. "Facts and Fantasies about Wage Setting and Collective Bargaining." Journal of Economic Perspectives, 36 (4): 29-52. DOI: 10.1257/jep.36.4.29
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J51 Trade Unions: Objectives, Structure, and Effects
- J52 Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining
- J53 Labor-Management Relations; Industrial Jurisprudence