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Wage Flexibility in a Unionized Economy with Stable Wage Dispersion

Mikael Carlsson (), Iida Häkkinen Skans and Oskar Skans

No 12093, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper estimates how wages respond to changes in regional unemployment using detailed Swedish micro data. The study is set in an economy with close to complete union coverage where real wages have grown continuously in all parts of the wage distribution for the past 15 years, and where the aggregate wage dispersion has remained constant for the same period. Our results show that this aggregate stability is coupled with non-trivial flexibility in terms of wage adjustments to changes in regional unemployment. Accounting for the fluctuations in composition of the employees is important for the estimated elasticity of wages. Wage adjustments are larger for employees with high unemployment risk and for new hires entering from unemployment.

Keywords: wages; unemployment; unions; wage flexibility (search for similar items in EconPapers)
JEL-codes: J5 J3 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2019-01
New Economics Papers: this item is included in nep-lab
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Working Paper: Wage Flexibility in a Unionized Economy with Stable Wage Dispersion (2017) Downloads
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