Bargaining, Capital Formation and Unemployment: A Putty-Clay Approach

Forslund, A, Lindh, T.
Authors registered in the RePEc Author Service: Thomas Lindh and Anders Forslund ()

Working Papers from Uppsala - Working Paper Series

Abstract: Swedish unemployment was very low up to the early 1990s when it rose rapidly. Theoretically, decentralisation of wage bargaining in the 1980s might have allowed low-productivity firms to survive or increased wage mark-ups, making employment more sensitive to shocks. In Swedish plant-level data for manufacturing 1968-1992 relatively less employment is in low-productivity plants after decentralisation than before, but a positive correlation emerges between industry wage costs and productivity. A putty-clay model with bargaining explains a puzzling desynchronisation between real wage and productivity growth and indicates the decentralisation might have increased the wage mark-up.

Keywords: UNEMPLOYMENT; BARGAINING; PRODUCTION (search for similar items in EconPapers)
JEL-codes: J23 J31 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1997
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Working Paper: Bargaining, Capital Formation and Unemployment: A Putty-Clay Approach (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:uppaal:1997-18

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