Do Centralized Bargains Lead to Wage Moderation? Time-Series Evidence from Finland

Abstract

Empirical research usually generally supports the view that the countries with a more centralized bargaining system have more favourable outcomes than countries where bargaining occurs at the industry level. These studies are usually based on cross-country data. This paper examines the relationship between the degree of centralization and wage increases within a country across years with different degrees of centralization. The key finding is that both bargained and actual nominal wage increases are lower when bargaining takes place at a national level.

This is part of the research project “Rules of the game in the labour market: Industrial relations, the bargaining system and income policies in the 2000s”, financed by the Finnish Work Environment Fund, and carried out jointly by ETLA, The Research Institute of the Finnish Economy and the Labour Institute for Economic Research. I am grateful to Steinar Holden, Pekka Sauramo and Hannu Piekkola for useful comments.