Heterogeneous Impacts of the Decentralization of Collective Bargaining

Abstract

This paper analyses the heterogeneous effects of the decentralization of collective bargaining on the incidence of wage increases and wage dispersion in Finland. We use linked employer-employee panel data for the 2005–2013 period, which includes major changes in bargaining systems and economic conditions. Our regression results from models with high-dimensional individual and firm fixed effects show that decentralized bargaining leads to very different outcomes for blue- and white-collar employees. Decentralized bargaining decreases wage dispersion among blue-collar employees and slightly increases it among white-collar employees. Decentralization also affects the incidence of wage increases differently for blue- and white-collar employees. We argue that these differences reflect the different preferences of the employee groups. We also show that the fallback option in local negotiations affects the decentralization outcomes.

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 83
Date
11.11.2020
Keywords
Decentralization, Collective agreements, Wage bargaining, Wage increase, Wage dispersion
ISSN
2323-2420, 2323-2439 (Pdf)
JEL
J31, J51, J52
Pages
40
Language
English