The Determination of Contract Wages in West Germany

Alan A. Carruth and Claus Schnabel ()

Scandinavian Journal of Economics, 1993, vol. 95, issue 3, pages 297-310

Abstract: The determination of contract wages in West Germany is studied within a bargaining framework, taking into account some institutional features of the bargaining system as well as the influence of economic forecasts and wage concepts. Cointegration regressions suggest that, in the long run, nominal contract wages are linked to prices, productivity (each with a unit elasticity), and unemployment. In addition to these factors, expectational errors concerning the inflation rate during the contract period and changes in the tax wedge affect (real) wage growth in the short run, but these effects seem to be temporary rather than permanent. Copyright 1993 by The editors of the Scandinavian Journal of Economics.

Date: 1993
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Scandinavian Journal of Economics is edited by Jonas Agell, Nils Gottfries and Espen R. Moen

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