wage determination in brazil the growth of union bargaining power and informal employment this article examines wage determination in brazilian manufacturing during the 1980s and early 1990s it presents evidence to show that the reduction in state regulation of collective bargaining has led to the development of a system of wage determination which is increasingly characterised by rent sharing and insider trade union bargaining power real wages appear increasingly inflexible with respect to movements in open unemployment with a large informal sector disciplining formal sector wage bargaining and cushioning the impact of broader labour market conditions an important consequence of this is that the employment costs of a successful counter inflationary strategy may be very severe

pay setting self employment and the unions one of the important influences that has shaped recent labour market policy is the idea that pay should depend on the employer s financial per formance this is believed both by politicians and by businessmen and comes in various guises it was the subject of long debate in the spring issues of the financial times prime minister john major argued that there should be no such thing as automatic pay increases pay must be linked to

average cost pricing versus serial cost sharing an axiomatic comparison abstract a finite group of agents share a one output production function a cost sharing rule allocates the total cost among the users for every conceivable profile of output demands we investigate the space of possible cost sharing rules from an axiomatic perspective we provide two characterizations of average cost pricing one based on the axioms of additivity and monotonicity both with respect to the cost function and the other based on the axioms of additivity and a version of consistency we also provide a characterization of serial cost sharing based essentially on additivity and a free lunch axiom journal of economic literature classification numbers d63 d78 c79

the low skill trap recently it has become popular to argue that certain workers have fallen into a trap in which they have poor skills few job opportunities and a low return on training while others have not this paper demonstrates how such a trap can occur within a simple matching model with rent sharing rent sharing diminishes the worker s incentive to acquire skills however since firms also benefit from training rent sharing likewise induces job creation the subsequent improved matching prospects may offset the initial disincentive to invest however for this mechanism to be effective firms and workers must coordinate their actions if they do not the trap occurs

regional disparities in the unemployment rate the role of the wage setting mechanism in spain 1987 92 bande r fernandez m and montuenga v m 2007 regional disparities in the unemployment rate the role of the wage setting mechanism in spain 1987 92 regional studies 41 the aim of this paper is to show how regional unemployment disparities in spain widen during economic upturns and to provide an explanation of this behaviour the analysis is based on the study of the wage setting mechanism that allows an estimation of the responses of wages to both labour productivity and the general situation of the labour market and an assessment of their impact on the evolution of regional unemployment the results of this estimation at the regional level with manufacturing data confirm the existence of marked differences between industries and between regions these responses these differences can be interpreted as a distinctive wage setting mechanism across industries and regions which may explain the evolution of unemployment rates within the regional labour markets bande r fernandez m et montuenga v

gender differences in rent sharing and its implications for the gender wage gap evidence from sweden abstract this study using matched employer employee data analyses gender differences in rent sharing results indicate significantly smaller remuneration from firm profits for women a difference that increases along the wage distribution gender differences in rent sharing explain less than 2 of mean gender wage differentials as differences are found in remuneration from firm profit and not in the mean profit levels of employing firms

the innovative behavior of spanish enterprises and its impact on salaries our aim was to analyze the effects of firms innovative behavior on their employees salaries in the spanish manufacturing industry we found a premium in the wage paid by innovative firms regardless of size however when taking company size into account we found that the effect of innovations was greater in small medium enterprises sme contrary to what was expected the inferences of the models estimated suggest that the higher the market concentration the weaker the appropriability regime especially for smes however at the same time a firm s innovations reduce the impact of market concentration on wages making innovating firms more autonomous than non innovating ones even more to be able to innovate firms have to isolate their employees salaries from the product market these results hold regardless of firm s size but have a greater impact on the small medium group of firms finally our analysis backs the assumption that salaries in both large and small medium firms are generated by two distinct economic regimes supporting the proposition that an sme is not simply a scaled down large firm

wages profits and capital intensity evidence from matched worker firm data swedish data on workers matched with firms balance sheet reports are used to examine the relation between wages and firms ability to pay results indicate that experienced and highly educated workers are sorted into profitable firms wages are positively correlated with profits and the capital labor ratio after controlling for worker quality degree of effort supervision job characteristics local unemployment firms employment history and employer size lester s range of pay due to rent sharing is around 12 24 of the mean wage in sweden which is close to the estimates for the united states and united kingdom

a new theory of corporatism and wage setting abstract the standard view on corporatist institutions for wage setting in many european economies is based of the insider outsider model corporatism is associated with lack of wage flexibility this paper discusses a new approach starting from the importance of nominal contracts the rationale for these contracts is to avoid future bargaining adjusting these contracts ex post to aggregate shocks would raise their efficiency however avoiding the bargaining required for this adjustment was the main reason for negotiating these contracts in the first place this is the fundamental contradiction under corporatism outside institutions can play this role these institutions provide therefore a type of flexibility not available in decentralized economies empirical evidence supports the basic ideas of this model

an investigation into the power of insiders in wage determination abstract this paper is concerned with the role of insider forces in wage determination various union and non union models of wage behaviour are considered and they imply that wages are a convex combination of internal and external factors certain union models also imply a degree of hysteresis data on fourteen british production industries reveal that i insider forces are important ii their importance is directly related to both union power and the degree of monopoly in the product market iii the state of the aggregate labour market is also important and iv hysteresis effects arising from insider power are only significant in a small minority of sectors

environmental taxation and unemployment some evidence on the double dividend hypothesis in europe abstract the employment double dividend hypothesis suggests that an appropriately designed fiscal reform in which emission charges are used to subsidize employers social security contributions may realize at least two relevant policy goals a better quality of the environment and at the same time an increase in employment levels this paper uses a newly developed econometric general equilibrium model for the european union as well as for each member country and presents simulation results up to the year 2010 of the effects of a european carbon tax the revenues from which are recycled to reduce employers social security contributions the results show that recycling carbon tax revenues may provide an employment double dividend only in the short run

imperfectly competitive labour markets and the productivity puzzle abstract we integrate imperfectly competitive labour markets in a dynamic macromodel in accordance with empirical evidence we find that temporary shocks are consistent with little real wage and large employment responsiveness while permanent shocks affect real wages and not employment

firm profitability regional unemployment and human capital in wage determination this paper presents an analysis of wage formation in the norwegian private sector using data for individual workers matched with firm level information and regional unemployment a key issue is to test whether or not firm specific variables affect individual wages after controlling for individual specific factors and working conditions the results imply positive effects of firm specific profitability and firm size the elasticity of wages with respect to value added per worker and firm size is 5 and 3 3 respectively empirical evidence of a downward sloping regional wage curve is also reported while there is no support of the hypothesis of compensating wage differentials since data for three levels of aggregation are used the ols estimates of the standard errors are downward biased therefore results using a random effects model are also reported taking the multi level structure of the data into account

the swedish third way an assessment of the performance and validity of the rehn meidner model the swedish third way an assessment of the performance and validity of the rehn meidner model

work sharing employment and wages the paper analyzes the effects of a reduction in working time on wages and employment with a monopoly union in general it is not clear in which directions these variables move but if employment and working time are perfect substitutes the effects are related to how working time has been determined initially the wage increases if initial working time is smaller than or equal to the trade union optimum whereas the result is unclear when it is larger in this case it is never optimal for a trade union to reduce both the wage and working time in response to a recessionary supply shock the analysis may help to explain varying attitudes towards work sharing in different countries

welfare implications of non scale r d based growth models non scale r d based growth models imply that the decentral and the socially optimal long run growth rate coincide nonetheless the distortions inherent in a market economy bias both the r d investment share and the saving rate as a result the level of the balanced growth path may differ substantially between the two types of solution implying a dramatic loss in welfare the present paper explores the sources and magnitude of this gap in addition the consequences of public policies are examined distinguishing between isolated policy measures from an overall policy programme

insider forces in wage determination new evidence for norwegian industries using panel data for norwegian industries we establish a significant permanent relation between industry wages and industry profitability the estimated long run insider weight is above 0 2 and stable both over time and across industries industry wages are significantly affected by aggregate unemployment and the preferred wage equation implies a highly convex wage curve

labour market institutions and economic performance labour markets richard freeman do particular types of labour market institution hold the key to economic success should other countries try to emulate the flexibility of the american labour market or the centralization of swedish style corporatism since 1970 within the oecd there has been a sharp divergence both of economic performance and of indicators of labour market structure the paper uses union density and the degree of wage dispersion across industries to proxy a country s underlying labour market institutions in assessing economic performance it is argued that cross country differences in output growth were much smaller than differences in employment growth for given output growth there is a clear negative relationship between employment growth and real wage growth across countries why do different countries find themselves at different points on this trade off the final part of the paper examines the correlation between indicators of labour market structure and the position on the wage employment trade off it concludes that the degree of wage dispersion across industries is the most important indicator of market structure and that countries with very high or very low dispersion typically the countries with highly centralized or highly decentralized bargaining in the labour market have better employment performance than countries with intermediate degrees of centralization and wage dispersion

cost sharing under increasing returns a comparison of simple mechanisms a technology with decreasing marginal costs is used by agents with equal rights each agent demands a quantity of output and costs are divided by means of a fixed formula several such mechanisms are compared for the existence of nash equilibrium demand profiles and for the equity properties of these equilibria among three mechanisms average cost pricing the shapley shubik cost sharing and serial cost sharing only the latter two possess at least one nash equilibrium on a reasonable domain of individual preferences only the serial cost sharing equilibria pass the equity tests of no envy and stand alone cost journal of economic literatureclassification numbers c72 d63

rent sharing and collective wage contracts evidence from german establishment level data using german establishment level data this article analyses whether wages respond to firm specific profitability conditions particular emphasis is given to the question of whether the extent of rent sharing varies with collective bargaining coverage in this context two conflicting hypotheses are tested the first one asserts that unions exploit their bargaining power at the firm level and appropriate a larger share of rents than the bargaining parties in uncovered firms the second one states that unions favour a compressed intra industry wage structure and suppress the responsiveness of wages to firm specific profitability conditions the empirical analysis provides strong support for the second hypothesis while pooled ordinary least squares pols estimates yield positive estimates of the rent sharing coefficient in covered establishments dynamic panel data estimates accounting for unobserved heterogeneity and the endogeneity of rents point to a rent sharing coefficient of zero

wages profits and rent sharing the paper suggests a new test for rent sharing in the u s labor market using an unbalanced panel from the manufacturing sector it shows that a rise in a sector s profitability leads after some years to an increase in the long run level of wages in that sector the paper controls for workers characteristics for industry fixed effects and for unionism lester s range of wages is estimated for rent sharing reasons alone at approximately 24 per cent of the mean wage

microdata evidence on rent sharing we examine the effect of firm profits on wages for individual workers while focusing on the empirical complications associated with estimating the extent of rent sharing controlling for worker and firm fixed effects and using several instruments to deal with the endogeneity of profits we report results indicating that ordinary least square ols estimates strongly underestimate the effects of profits on wages moreover the effect of profits on wages are estimated separately for firms with increasing and decreasing profits within a given time period we find a positive and stable effect only in firms with increasing profits this is in line with the idea that falling profits do not lead to wage cuts while increasing profits imply higher wages

rent sharing and collective bargaining coverage evidence from linked employer employee data using a linked employer employee data set this paper analyses the relationship between firm profitability and wages particular emphasis is given to the question of whether the sensitivity of wages to firm specific rents varies with collective bargaining coverage to address this issue we distinguish sector specific wage agreements firm specific wage agreements and wage determination without any bargaining coverage our findings indicate that individual wages are positively related to firm specific rents in the non union sector and under firm specific contracts industry wide wage contracts however seem to suppress firm level rent sharing while pooled ols estimates yield a positive correlation between wages and quasi rents under centralised contracts estimates accounting for unobserved individual and establishment heterogeneity point to a coefficient of zero differenced gmm estimates accounting for the endogeneity of our profitability measure even point to a negative relationship under centralised contracts

shareholder wealth and wages evidence for white collar workers we present empirical evidence on the relationship between individual wages conditional on worker characteristics and equity returns using a unique survey from the bureau of labor statistics equity returns affect the wages only of workers with three or more years of tenure a 4 percent increase in a firm s market value raises pay by 0 3 percent within three years our estimates suggest that each 10 increase in shareholder wealth raises the present value of a firm s wage bill by 1 the elasticity of white collar wages with respect to equity returns is one third smaller than the ceo salary elasticities in our sample

unions and interindustry wage differentials abstract we investigate the importance of trade unions in collective bargaining in the context of a developing country manufacturing labor market the methodology we adopt to estimate wage differentials follows the method proposed by haisken denew j p and schmidt c m 1997 review of economics and statistics 79 516 521 since it improves on the standard procedure popularized by krueger a b and summers l h 1988 econometrica 56 193 259 our findings indicate that wage dispersion is far greater in the unionized sector of brazilian manufacturing in contrast to evidence from other countries

the determination of wages employment and work hours in an economy with centralised wage setting sweden 1950 83 a key component of recent explanations for the growth in unemployme nt in western europe is a negative relation between wage rates and employment this paper examines the evidence for such a relationship for swedish manufacturing industry and also investigates the corresponding movements of hours of work the findings form the ingredients of a structural model of the labor market which is estimated using time series observations from 1951 t o 1983 the greater volatility of employment relative to earnings is measured by a specific parameter which in this model relates to the objectives of trade unions copyright 1988 by royal economic society

insider forces and wage determination this paper investigates the relative importance of firm specific factors i e insider forces in wage determination using firm level data on 219 u k companies over 1974 82 it finds that a 1 percent rise in a firm s prices or productivity relative to the aggregate economy leads to a rise in relative wages of 0 1 0 2 percent as a corollary to this outside factors like the aggregate wage and the unemployment rate also play an important role there is evidence for insider based hysteresis effects but these are inversely related to the extent to which firms take national agreements into account copyright 1990 by royal economic society

on the uniqueness of equilibrium in cournot oligopoly and other games abstract in an average surplus sharing game such as a cournot oligopoly a group of agents share a production process each contributes an amount of input to the process and output is divided in proportion to the amount of input contributed uniqueness of the equilibrium is needed for any type of comparative static analysis however general uniqueness results for concave games have restrictive assumptions on preferences and technology specifically the conditions needed for uniqueness become more difficult to meet as the number of players increases a new theorem for uniqueness with easily interpretable conditions is given which is independent of the number of players journal of economic literature classification numbers c70 c72 d43

the rise in unemployment a multi country study one of the most remarkable features of recent economic history has been the remorseless rise in unemployment throughout the industrialized countries however while the trend to higher unemployment is universal the experience of individual countries also differs widely the increase is especially marked within the european community where unemployment rates rival those reached in the interwar years by contrast in the scandinavian countries and japan unemployment is lower and has risen very much less experience in the united states lies somewhere between these extremes and in the last few years unemployment there has fallen sharply

decreasing serial cost sharing under economies of scale we consider the problem of cost sharing in the presence of increasing returns to scale and potential strategic behavior on the part of consumers we show that any smooth and strictly monotonic mechanism for which a nash equilibrium exists for all profiles of convex and monotonic preferences must be dictatorial however we propose a cost sharing mechanism the decreasing serial mechanism for which an interesting domain restriction ensures existence of a noncooperative equilibrium for its cost sharing game a characterization theorem of the mechanism based on the strategic properties of existence uniqueness and efficiency of its noncooperative equilibrium is provided journal of economic literature classification numbers c70 c72 d70 cost allocation is a practical problem that organizations of all kinds face universities allocate computing costs among departments aviation authorities set landing fees for aircraft based on their size regulatory com missions set rates for electricity water and other utilities based on the costs of providing these services the common feature in all of these exam ples is that prices are not determined externally by market forces but are set internally by mutual agreement or administrative decision a simple situation where a cost sharing problem can emerge is when a set of users share a technology that transforms a single input into a single output we study this cost sharing problem when the cost function is increasing and concave examples include the division of costs incurred in setting telephone lines or a water supply system the assessment of fees to pay for a secretary or a gardener s services and so on the situations we have in mind are those of cooperative production or natural nonregulated monopolies for either of these situations there is no obvious answer to the question of how to divide the cost of producing the total output among the users

corporate income taxation of multinationals in a general equilibrium model abstract this paper contributes to the discussion on separate accounting versus formula apportionment in the corporate income taxation of multinational enterprises the innovation is that we consider a general equilibrium tax competition model with an endogenous interest rate in contrast to previous studies we show that tax rates are inefficiently low not only under separate accounting but also under formula apportionment moreover we identify a wide range of empirically relevant cases where formula apportionment is superior to separate accounting independent of the magnitude of the concealment cost of profit shifting the reason for the change in results is that one country s tax rate affects other countries additionally via changes in the interest rate

local and central wage bargaining the literature on wage bargaining usually considers either central or local wage bargaining an exception is holmlund 1986 throughout most of the unionized part of the private sector in norway wage bargaining takes place on two levels first centrally and then locally in the economic policy debate it has been argued that this system leads to higher wages and lower employment than bargaining on only one level regardless of whether it is central or local see e g skatnland 1983 in this paper i present a model with wage bargaining on two levels and show that in this system the above argument is proved false we focus on an industry with n identical firms which produce one homogeneous product for simplicity the output price and input prices other than wages are considered given on the central level there is a utility maximizing labor union with a quasi concave utility function increasing in the arguments employment l and total wage vv there is a local labor union in each firm we analyze the system during one period say a year wage setting in this period consists of three stages in the first stage the central labor union sets the tariff wage q unilaterally this follows the monopoly model of e g dunlop 1944 and oswald 1985 in the second stage the firms determine the employment l which prevails until the next period in the third and final stage the local union negotiates with the management of the firm about local wage drift the total wage is w q wage drift the assumption that the firms determine employment prior to wage bargaining is used by e g moene 1987 and horn wolinsky 1985 both the central labor union and the firms know how local wage bargaining functions and can therefore perfectly anticipate what the result

insider effects in wage determination abstract the paper attempts to shed new light on the determinants of industry wages by a cross country comparison of wage setting relationships making use of comprehensive and consistent panel data on industries from the early 1960s to the mid 1980s the empirical analysis involves estimations of identically specified industry wage equations for each of five countries sweden norway finland germany and the united states a key finding is that industry wages in the u s are the most responsive to sectoral price and productivity changes by contrast industry wages in the nordic countries are largely unaffected by sectoral conditions the results cast doubt on the competitive model as an accurate characterization of wage setting under decentralization

do r d tax incentives lead to higher wages for r d workers evidence from the netherlands this paper examines the impact of the dutch r d tax incentive scheme on the wages of r d workers we construct firm specific r d tax credit rates that vary over time following variations in the dutch r d tax incentive program using instrumental variables we estimate a wage sharing model with an unbalanced firm level panel data covering the period 1997 2004 the elasticity of the r d wage with respect to the fraction of the wage supported by the fiscal incentives scheme is estimated at 0 2 in the short run and 0 24 in the long run

welfare bounds in the cooperative production problem a general model of lower bound individual rationality and upper bound axioms for fair allocation is proposed the unanimity welfare function associates to each individual utility function the highest equal utility feasibile when all agents share this utility if this function is a feasible lower bound resp upper bound then it is the highest lower bound of all resp the lower upper bound applying this to cooperative production of private goods we characterize when the unanimity welfare is a lower upper bound function and when the stand alone welfare is an upper or lower bound our approach unifies several familiar fairness properties

rationalizability learning and equilibrium in games with strategic complementarities we study a rich class of noncooperative games that includes models of oligopoly competition macroeconomic coordination failures arms races bank runs technology adoption and diffusion r d competition pretrial bargaining coordination in teams and many others for all these games the sets of pure strategy nash equilibria correlated equilibria and rationalizable strategies have identical bounds also for a class of models of dynamic adaptive choice behavior that encompasses both best response dynamics and bayesian learning the players choices lie eventually within the same bounds these bounds are shown to vary monotonically with certain exogenous parameters we study the class of noncooperative supermodular games introduced by topkis 1979 and further analyzed by vives 1985 1989 who also pointed out the importance of these games in industrial economics supermodular games are games in which each player s strategy set is partially ordered the marginal returns to increasing one s strategy rise with increases in the competitors strategies so that the game exhibits strategic complementarity 2 and if a player s strategies are multidimensional marginal returns to any one com ponent of the player s strategy rise with increases in the other components this class turns out to encompass many of the most important economic applications of noncooperative game theory in macroeconomics diamond s 1982 search model and bryant s 1983 1984 rational expectations models can be represented as supermodular games in each of these models more activity by some members of the economy raises the returns to increased levels of activity by others in oligopoly theory some models of bertrand oligopoly with differentiated products qualify as supermodu lar games in these games when a firm s competitors raise their prices the marginal profitability of the firm s own price increase rises a similar structure is present in games of new technology adoption such as those of dybvig and spatt 1983 farrell and saloner 1986 and katz and shapiro 1986 when more users hook into a communication system or more manufacturers adopt an interface standard the marginal return to others of doing the same often rises similarly in some specifications of the bank runs model introduced by diamond and dybvig 1983 when more depositors withdraw their funds from a bank it is more worthwhile for other depositors to do the same in the warrant exercise

wages policy and unemployment in australia it is generally accepted among australian economists that high rates of growth of wages at various times over the last decade have made the achievement of full employment and lower rates of inflation more difficult fear of a further acceleration of wage growth has also been a policy constraint it is when one attempts to go further that considerable disagreement becomes evident from a labour market viewpoint there does not seem to be a consensus as to the answers to the two broad questions that should be addressed first how important are wage changes relative to other factors that depress employment and add to the inflation rate second how does government policy impinge on the process that generates wage changes to do justice to both of these in a paper as short as this one is difficult so i shall focus most of the paper on the second question the relationships between government policy and wage changes are particularly important at this time for most of the last decade successive governments have operated a national wages policy which to a large degree has been based on the indexation of wages for past price changes the latest experiment the prices and incomes accord is the centrepiece of the current government s employment and inflation policy and after almost two years of wide community and media support the key principles upon which it is based are suddenly being questioned 1 our prime endeavour therefore will be to build up sufficient understanding of the wage determination process so that some evaluation can be made as to the effectiveness of these national wage policies this turns out to be a remarkably difficult task which generates considerable concern in our mind that the data may not be sufficiently rich to serve as a basis for sound judgments it does appear however that the effect of a given level of unemployment upon wage changes has consistently weakened over the last decade why this should be so is a major unresolved puzzle i offer a loosely constructed theory that is consistent with the facts but it is by no means the only possible explanation section i provides a description of wage setting in australia and some key facts of the economy in section ii the statistical analysis of wage changes focuses on two competing theories one is the phillips curve approach and the other stresses that wage outcomes may be to a significant degree independent of the level of unemployment and may depend instead on utilization rates of labour within the firm section iii considers the efficacy of incomes policies in australia some final comments areoffered in section iv

profit sharing in unique nash equilibrium characterization in the two agent case abstract two agents jointly operate a decreasing marginal returns technology to produce a private good we characterize the class of output sharing rules for which the labor supply game has a unique nash equilibrium it consists of two families rules of the serial type which protect a small user from the negative externality imposed by a large user and rules of the reverse serial type where one agent effectively employs the other agent s labor exactly two rules satisfy symmetry a result in sharp contrast with moulin and shenker s characterization of their serial mechanism as the unique cost sharing rule satisfying the same incentives property moulin h shenker s 1992 serial cost sharing econometrica 60 5 1009 1037 we also show that the familiar stand alone test characterizes the class of fixed path methods under our incentives criterion friedman e j 2004 strong monotonicity in surplus sharing econ theory 23 643 658