Pattern Bargaining and Wage Leadership in a Small Open Economy

Lars Calmfors and Anna Larsson
Authors registered in the RePEc Author Service: Anna Seim

No 3510, CESifo Working Paper Series from CESifo

Abstract: Pattern bargaining with the tradables (manufacturing) sector as wage leader is a common form of wage bargaining in Europe. We question the conventional wisdom that such bargaining produces wage restraint. In our model all forms of pattern bargaining give the same outcomes as uncoordinated bargaining under inflation targeting. Under monetary union wage leadership for the non-tradables sector is conducive to wage restraint, whereas wage leadership for the tradables sector is not. Comparison thinking may lead the follower to set the same wage as the leader. Such equilibria can arise when the leader sector is the smaller sector and promote high employment.

Keywords: pattern bargaining; wage setting; inflation targeting; monetary regimes (search for similar items in EconPapers)
JEL-codes: E24 J50 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Pattern Bargaining and Wage Leadership in a Small Open Economy (2009)
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