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Labour Market Structures, Labour Market Policy and Wage Formation in the OECD
Author(s) -
Heylen Freddy
Publication year - 1993
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/j.1467-9914.1993.tb00195.x
Subject(s) - wage , economics , unemployment , labour economics , wage bargaining , incentive , flexibility (engineering) , efficiency wage , insider , collective bargaining , market economy , macroeconomics , management , political science , law
This paper investigates why the incentive to moderate wages in an environment of rising unemployment differs so strongly among the OECD countries. In the first part we develop an insider‐outsider bargaining model in which the wage results from a confrontation of the insiders' wage claims and the employer's wage offer. The second part of the paper empirically tests the model's predictions for the determinants of wage flexibility. The degree of centralization of wage bargaining, the extent of active labour market policy and the characteristics of the unemployment benefit system are shown to be relevant determinants.