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The Impact of Wage Bargaining Regime on Firm‐Level Competitiveness and Wage Inequality: The Case of Ireland
Author(s) -
McGUINNESS SEAMUS,
KELLY ELISH,
O’CONNELL PHILIP J.
Publication year - 2010
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/j.1468-232x.2010.00618.x
Subject(s) - multinational corporation , labour economics , collective bargaining , wage , wage bargaining , wage inequality , wage dispersion , economics , private sector , bargaining power , efficiency wage , inequality , business , microeconomics , economic growth , finance , mathematical analysis , mathematics
This paper uses a linked employer‐employee dataset to analyze the impact of institutional wage bargaining regimes on average labor costs and within‐firm wage dispersion in private sector companies in Ireland. The results show that while centralized bargaining reduced labor costs within both the indigenous and foreign‐owned sectors, the relative advantage was greater among foreign‐owned firms. The analysis suggests that there are potentially large competitiveness gains to multinational companies that locate in countries implementing a centralized bargaining system. Furthermore, the results provide additional support to the view that collective bargaining reduces within‐firm wage inequality.