Centralized Wage Setting and Labor Market Policies: the Nordic Model Case

Luca Zamparelli and Francesco Vona

No 1005, Working Papers CELEG from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: It is often argued that rigid labour market and centralized bargaining are harmful employment and growth. This paper looks at the case of Nordic countries as a counter-example pointing to some weaknesses of this view. Rigid labour markets, while reducing the offer of low quality jobs, increase average labor productivity by favoring job relocation in high quality jobs. Moene and Wallerstein (1997) adopted a vintage-capital model to compare centralized and decentralized bargaining: they show that centralized bargaining systems yield higher labor productivity and higher structural unemployment. By introducing a frictional labor market in the vintage-capital framework, we show that the negative effects on employment characterizing centralized bargaining can be reduced by adopting active labor market policy.

Keywords: Centralized wage setting; structural change; labor market policy; frictional unemployment (search for similar items in EconPapers)
JEL-codes: J31 J60 L16 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://static.luiss.it/RePEc/pdf/celegw/1005.pdf (application/pdf)

Related works:
Working Paper: Centralized wage setting and labor market policies: the nordic model case (2010)
Working Paper: Centralized Wage Setting and Labor Market Policies: the Nordic Model Case (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lui:celegw:1005

Access Statistics for this paper

More papers in Working Papers CELEG from Dipartimento di Economia e Finanza, LUISS Guido Carli Contact information at EDIRC.
Bibliographic data for series maintained by Paolo Giordani ( this e-mail address is bad, please contact ).