Bargained Wages, Wage Drift and the Design of the Wage Setting System
Pedro Portugal () and
Ana Rute Cardoso
Working Papers from Banco de Portugal, Economics and Research Department
Abstract:
This paper aims at answering the question: How does a typically European bargaining system - with collective bargaining, extension mechanisms and national minimum wage - coexist with low unemployment rate and high wage flexibility? A unique data set on workers, firms and collective bargaining contracts in the Portuguese economy is used to analyze the determinants of both the bargained wage and the wage drift. Results indicate that wage drift stretches the returns to every worker and firm attribute, whereas it shrinks the returns to union bargaining power. Therefore, firm-specific arrangements, in the form of wage drift, partly offset collective bargaining, granting firms a high degree of freedom when setting wages. Union bargaining power raises the overall wage level, but lowers the returns on worker attributes, an outcome of the egalitarian policy pursued.
JEL-codes: D21 J31 J51 (search for similar items in EconPapers)
Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)
Downloads: (external link)
https://www.bportugal.pt/sites/default/files/anexos/papers/wp200318.pdf
Related works:
Working Paper: Bargained Wages, Wage Drift and the Design of the Wage-Setting System (2004) 
Working Paper: Bargained Wages, Wage Drift and the Design of the Wage Setting System (2003) 
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:ptu:wpaper:w200318
Access Statistics for this paper
More papers in Working Papers from Banco de Portugal, Economics and Research Department Contact information at EDIRC.
Bibliographic data for series maintained by DEE-NTD ().