Real and Nominal Wage Adjustment in Open Economies

Anders Forslund (), Nils Gottfries () and Andreas Westermark

No 2005:18, Working Paper Series from Uppsala University, Department of Economics

Abstract: A wage equation for a small open economy is derived and estimated on aggregate data for the Nordic countries. The equation is derived from a model of wage bargaining over nominal wages; hence both long run coefficients and adjustment parameters have clear economic interpretations. Wages depend on the scope (main course) for wage increases; based on our theoretical model we interpret this as evidence of union bargaining power. Unemployment benefits have substantial effects on wages in all four countries. There is substantial nominal wage rigidity; hence changes in exchange rates have large and persistent effects on competitiveness.

Keywords: wage formation; bargaining; rent sharing; turnover; search; exchange rate policy; wage equation; wage rigidity; competitiveness (search for similar items in EconPapers)
JEL-codes: E52 F33 F41 J31 J51 J63 J64 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2005-06-12
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Forthcoming in Scandinavian Journal of Economics, 2008.

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Related works:
Working Paper: Real and Nominal Wage Adjustment in Open Economies (2006)
Working Paper: Real and nominal wage adjustment in open economies (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2005_018

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