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TitleFirm heterogeneity and wages in unionised labour markets : theory and evidence
Author(s)Bastos, Paulo
Monteiro, Natália
Straume, Odd Rune
KeywordsWage determination
Trade unions
Firm heterogeneity
Issue dateAug-2009
PublisherElsevier B.V.
JournalLabour Economics
Abstract(s)In many countries wages are set in two stages, where industry-level collective bargaining is followed by firm-specific arrangements determining actual paid wages as a mark-up on the industry wage floor. What explains the wage set in each of these stages? In this paper we show that both the industry wage floor and the average wage cushion are systematically associated with the degree of firm heterogeneity in the industry: The former (latter) is negatively (positively) associated with the productivity spread. Furthermore, since the response of the wage floor dominates that of the wage cushion, workers in more heterogeneous industries tend to get lower actual paid wages. These conclusions are reached in a model of Cournot oligopoly with firm productivity heterogeneity and a two-tiered wage setting system. They are then confirmed by administrative data covering virtually all workers, firms and collective bargaining agreements of the Portuguese private sector for the period 1991–2000.
Publisher versiondoi:10.1016/j.labeco.2008.12.004
AccessOpen access
Appears in Collections:NIPE - Artigos em Revistas de Circulação Internacional com Arbitragem Científica

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