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| Author: | Forslund, A. Gottfries, N. Westermark, A. |
| Title: | Prices, productivity and wage bargaining in open economies |
| Journal: | Scandinavian Journal of Economics
2008 : VOL. 110:1, p. 169-195 |
| Index terms: | Nordic countries open economy wage determination pay turnover |
| Freeterms: | non-cooperative bargain |
| Language: | eng |
| Abstract: | According to the standard union bargaining (henceforth as: brgn.) model, unemployment (here as: un-empl.) benefits should have big effects on wages, but product-market (as: p-m.) prices and productivity (as: prodty.) should play no role in the wage brgn. This paper formulates an alternative strategic brgn. model, where labour and p-m. conditions together determine wages. A wage equation is derived and estimated on aggregate data for four Nordic countries, that is, Finland, Denmark, Norway, and Sweden. It is found that wages depend not only on un-empl. and the replacement ratio, but also on prodty., international prices and exchange rates. There is evidence of considerable nominal wage rigidity. Exchange rate changes have large and persistent effects on competitiveness. |
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