Resource curse avoidance: governmental intervention and wage formation in the Norwegian petroleum sector

Jan Morten DyrstadBy

Oxford Economic Papers, 2017, vol. 69, issue 3, 809-833

Abstract: A likely channel for Dutch disease, turning a presumably blessed resource windfall into a curse, is the wage formation process. By utilizing the shift from decentralized and uncoordinated wage bargaining in the Norwegian petroleum sector to co-ordinated bargaining, this paper analyses the effectiveness of a governmental intervention aimed at preventing the extraordinary petroleum wage inflation to become detrimental to the economy. The empirical analysis shows that the intervention was successful as insider weights and insider hysteresis effects were reduced, and that the system of coordinated wage bargaining was re-established. The principal conclusion is that institutions and institutional settings play a crucial role in avoiding adverse economic development.

JEL-codes: J31 J38 O43 (search for similar items in EconPapers)
Date: 2017
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