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Wage Premia, Price-Cost Margins and Bargaining Over Employment in Belgian Manufacturing : An Analysis of Distinct Behavior Among Various Skilled Workers

Author

Listed:
  • Bughin, Jacques

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

This model estimates an asymetric Nash efficient wage bargaining model for some Belgian manufacturing sectors at the firm level, under the premises that bargaining units are separate for 'R&D' people and other 'common' workers in order to account for 'wage rivalry' effects. The importance of R&D activity as a strategic use for firm growth is supported by higher bargaining power for 'R&D' people than for common labor, while 'R&D' people tend also to attach less importance to employment as compared to wages, possibly because of greater outside job opportunities. In addition, the bargaining power of either union group depends on (the fluctuation of) output market power (through the industry degree of utilization capacity and the level of industry concentration) and on the firm financial structure (through the level of debt). Further, skilled workers bargaining strength seems reduced by underinvestment in R&D activity in order for firms to reduce the revenues accruing from assets which are sunk at the time of negotiation. Finally some evidence of a 'wage-wage' spiral is found for some sectors, indicating that there is room for separate bargaining units to coordinate somewhat their claims and collusively increase their power to extract oligopolistic profits.

Suggested Citation

  • Bughin, Jacques, 1991. "Wage Premia, Price-Cost Margins and Bargaining Over Employment in Belgian Manufacturing : An Analysis of Distinct Behavior Among Various Skilled Workers," LIDAM Discussion Papers IRES 1991012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:1991012
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    Cited by:

    1. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," MPRA Paper 83525, University Library of Munich, Germany.
    2. Lourdes Moreno & Diego Rodríguez, 2011. "Markups, Bargaining Power and Offshoring: An Empirical Assessment-super-1," The World Economy, Wiley Blackwell, vol. 34(9), pages 1593-1627, September.
    3. de la Croix, David, 1994. "Wage Interdependence through Decentralized Bargaining," Journal of Economic Surveys, Wiley Blackwell, vol. 8(4), pages 371-403, December.
    4. S. Dobbelaere, 2003. "Ownership, Firm Size and Rent Sharing in a Transition Country," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/170, Ghent University, Faculty of Economics and Business Administration.
    5. Dobbelaere, Sabien, 2004. "Ownership, firm size and rent sharing in Bulgaria," Labour Economics, Elsevier, vol. 11(2), pages 165-189, April.

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