Dark Half: Decentralized Bargaining and Well-being at Work

Abstract

Using information on collective agreements and administrative data on mental ill-health, sickness absence, and job separations, we study the effect of decentralization on well-being at work in Finland. Our regression results with individual-and firm-level fixed effects show that decentralized wage bargaining leads to distinct outcomes for different employee groups. For example, white-collar employees in white-collar intensive firms show increased well-being at work. In contrast, all employees in blue-collar intensive firms show quite strong and negative responses to decentralization. Decentralization affects mostly job-separation behavior and mental ill-health, whereas no consistent effects for sickness absence are observed. Whether the mechanisms between decentralization and worker’s well-being is explained by pay dispersion, wage level, or different preferences toward wage policy needs to be explored further.

Publication info

Results of research
Impacts of collective agreement on wage increases and work capacity
Research group
Labour market and education
Series
ETLA Working Papers 89
Date
23.08.2021
Keywords
Decentralization, Collective agreements, Mental health disorder, Sickness absence, Job separation, Blue-collar, White-collar
ISSN
2323-2420, 2323-2439 (Pdf)
JEL
J31, J51, J52
Pages
42
Language
English