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The impact of collective bargaining on employment and wage inequality: Evidence from a new taxonomy of bargaining systems

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  • Andrea Garnero

Abstract

To study the link between different types of collective bargaining systems and employment, unemployment and wage inequality, I use a novel taxonomy of bargaining systems in 36 OECD countries between 1980 and 2015. The results show that coordinated bargaining systems are associated with higher employment, better integration of vulnerable groups and lower wage inequality than fully decentralized systems. Uncoordinated centralized systems perform similarly in terms of unemployment to fully decentralized systems but are associated with higher employment and lower wage inequalities. These results suggest that the link between decentralization and good labour market outcomes is more nuanced than previously suggested.

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  • Andrea Garnero, 2021. "The impact of collective bargaining on employment and wage inequality: Evidence from a new taxonomy of bargaining systems," European Journal of Industrial Relations, , vol. 27(2), pages 185-202, June.
    • Handle: RePEc:sae:eurjou:v:27:y:2021:i:2:p:185-202
    DOI: 10.1177/0959680120920771
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    2. Pankaj C. Patel & Cornelius A. Rietveld, 2023. "Right of association and new business entry: country-level evidence from the market sector," Small Business Economics, Springer, vol. 61(3), pages 1161-1177, October.
    3. Leibrecht, Markus & Scharler, Johann & Zhoufu, Yan, 2023. "Automation and unemployment: Does collective bargaining moderate their association?," Structural Change and Economic Dynamics, Elsevier, vol. 67(C), pages 264-276.
    4. Ramos, Raul & Sanromá, Esteban & Simón, Hipólito, 2022. "Collective bargaining levels, employment and wage inequality in Spain," Journal of Policy Modeling, Elsevier, vol. 44(2), pages 375-395.
    5. Henri Haapanala & Ive Marx & Zachary Parolin, 2023. "Robots and unions: The moderating effect of organized labour on technological unemployment," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 44(3), pages 827-852, August.
    6. Ponce, Pablo & Yunga, Fernando & Larrea-Silva, Jhohana & Aguirre, Nikolay, 2023. "Spatial determinants of income inequality at the global level: The role of natural resources," Resources Policy, Elsevier, vol. 84(C).
    7. Cardullo, Gabriele, 2024. "Slouching Towards Decentralization. An Equilibrium Approach for Collective Bargaining," IZA Discussion Papers 16870, Institute of Labor Economics (IZA).
    8. Ive Marx; & Henri Haapanala; & Sarah Marchal;, 2024. "Well-BOA: Is poverty reduction in Europe doomed? Conjectures, facts and a cautiously optimistic conclusion," Working Papers 2403, Herman Deleeck Centre for Social Policy, University of Antwerp.
    9. Giorgio Cutuli & Alessio Tomelleri, 2023. "Returns to digital skills use, temporary employment, and trade unions in European labour markets," European Journal of Industrial Relations, , vol. 29(4), pages 393-413, December.
    10. Marx, Ive & Haapanala, Henri & Marchal, Sarah, 2024. "Is Poverty Reduction in Europe Doomed? Conjectures, Facts and a Cautiously Optimistic Conclusion," IZA Discussion Papers 16967, Institute of Labor Economics (IZA).
    11. Antti Kauhanen & Terhi Maczulskij & Krista Riukula, 2024. "The incidence and effects of decentralized wage bargaining in Finland," Journal of Labor Research, Springer, vol. 45(2), pages 232-253, June.
    12. Riccardo Rovelli, 2024. "Labor market institutions and policies in old and new EU members," IZA World of Labor, Institute of Labor Economics (IZA), pages 222-222, January.
    13. Claus‐Jochen Haake & Thorsten Upmann & Papatya Duman, 2023. "Wage bargaining and employment revisited: separability and efficiency in collective bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 403-440, April.
    14. Wouter Zwysen & Jan Drahokoupil, 2024. "Collective bargaining and power: Wage premium of collective agreements in Europe 2002–2018," British Journal of Industrial Relations, London School of Economics, vol. 62(2), pages 335-357, June.

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