Research / BFI Working PaperAug 31, 2022

Facts and Fantasies about Wage Setting and Collective Bargaining

Manudeep Bhuller, Karl Ove Moene, Magne Mogstad, Ola L. Vestad

In this article, we document and discuss salient features of collective bargaining systems in the OECD countries, with the goal of debunking some misconceptions and myths and revitalizing the general interest in wage setting and collective bargaining. We hope that such an interest may help close the gap between how economists tend to model wage setting and how wages are actually set. Canonical models of competitive labor markets, monopsony, and search and matching all assume a decentralized wage setting where individual firms and workers determine wages. In most advanced economies, however, it is common that firms or employer associations bargain with unions over wages, producing collective bargaining systems. We show that the characteristics of these systems vary in important ways across advanced economies, with regards to both the scope and the structure of collective bargaining.

More Research From These Scholars

BFI Working Paper Mar 12, 2019

Improving Educational Pathways to Social Mobility: Evidence from Norway’s “Reform 94”

Marianne Bertrand, Magne Mogstad, Jack Mountjoy
Topics:  Higher Education & Workforce Training
BFI Working Paper Jun 3, 2021

Family Background, Neighborhoods and Intergenerational Mobility

Magne Mogstad, Gaute Torsvik
Topics:  Economic Mobility & Poverty
BFI Working Paper Feb 9, 2022

When is TSLS Actually LATE?

Christine Blandhol, John Bonney, Magne Mogstad, Alexander Torgovitsky
Topics:  Uncategorized