Contractual Wages and the Wage Cushion under Different Bargaining Settings

Ana Rute Cardoso · Pedro Portugal

249 citations0/0 files storedJournal of Labor Economics

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Labor market dynamics and wage inequality Labor Movements and Unions Employment, Labor, and Gender Studies

Abstract

How does a typically European bargaining system, with collective bargaining and national minimum wage, coexist with low unemployment and high wage flexibility? A unique data set on workers, firms, and collective bargaining contracts in Portugal is used to analyze the determinants of both the contractual wage and the wage cushion (difference between contractual and actual wages). The results indicate that the wage cushion stretches the returns to worker and firm attributes, whereas it shrinks the returns to union power. Therefore, firm‐specific arrangements partly offset collective bargaining, granting firms certain freedom when setting wages. Contractual wages reflect trade unions' egalitarian policy.

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References

1988Bargaining Structure, Corporatism and Macroeconomic Performance 1997Unemployment and Labor Market Rigidities: Europe versus North America 1996The Effect of Unions on the Structure of Wages: A Longitudinal Analysis 1983Longitudinal Analyses of the Effects of Trade Unions 1980Unionism and the Dispersion of Wages 1998Corporatism or Competition?1978Individual Preferences and Union Wage Determination: The Case of the United Mine Workers 2002Wages and the bargaining regime in a corporatist setting: the Netherlands

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