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ID: 099295

Building strategic capacity: the political underpinnings of coordinated wage bargaining / Ahlquist, John S

Ahlquist, John S	Journal Article
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2010.

Summary/Abstract

Encompassing labor movements and coordinated wage setting are central to the social democratic economic model that has proven successful among the nations of Western Europe. The coordination of wage bargaining across many unions and employers has been used to explain everything from inequality to unemployment. Yet there has been limited theoretical and quantitative empirical work exploring the determinants of bargaining coordination. I argue formally that more unequally distributed resources across unions should inhibit the centralization of strike powers in union federations. Using membership as a proxy for union resources, I find empirical evidence for this hypothesis in a panel of 15 OECD democracies, 1950-2000. I then show that the centralization of strike powers is a strong predictor of coordinated bargaining.

Key Words

Strategic Capacity ; Political Underpinnings ; Wage Bargaining

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ID: 151277

Wage bargaining, inequality, and the Dutch disease / Bunte, Jonas B

Bunte, Jonas B	Journal Article
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Summary/Abstract

The theory of the “Dutch Disease” predicts that income from oil and other natural resources produces negative economic consequences through two different mechanisms. The “Resource Movement Effect” suggests that workers leave manufacturing for higher-paying jobs in other sectors. The “Spending Effect” implies that spending resource wealth domestically leads to exchange rate appreciation. The combination of these processes results in the contraction of the export sector. This article explores how, and why, a country’s institutions may prevent the Dutch Disease before it starts. Incorporating insights from the “Varieties of Capitalism” literature, I find that the Dutch Disease is significantly less severe in countries with a high degree of wage bargaining coordination and with low income inequality. The former interrupts the Resource Movement Effect as it limits workers’ incentives to move out of the tradable sector. The latter moderates the Spending Effect because it prevents appreciation of the real exchange rate.

Key Words

Inequality ; Wage Bargaining ; Dutch Disease

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