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Wage and employment effects of a wage norm: The Polish transition experience

Alain de Crombrugghe () and Grégory de Walque
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Alain de Crombrugghe: University of Namur, Department of Economics

No 209, Working Paper Research from National Bank of Belgium

Abstract: Most transition countries used tax-supported wage norms in the early 1990's, as a part of their market liberalization programs. This paper analyses how a firm-level tax (or subsidy) on deviations from a pre-set wage norm may promote employment by rotating the labor demand curve perceived by the workers' union around the value of the norm. We derive the conditions such that it yields a positive employment effect. We test the effect of the norm on the wages on a sample of Polish firms in 1990 and 1991. The data support the role of the wage norm on the position of the perceived labor demand and the role of the tax rate on its slope.

Keywords: transition economies; labor market; unions; excess wage tax; employment (search for similar items in EconPapers)
JEL-codes: H23 J23 J5 P31 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2011-01
New Economics Papers: this item is included in nep-acc, nep-lab and nep-tra
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Handle: RePEc:nbb:reswpp:201101-209