Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/78635 
Year of Publication: 
2005
Series/Report no.: 
Working Paper No. 2005:23
Publisher: 
Institute for Labour Market Policy Evaluation (IFAU), Uppsala
Abstract: 
How are wages set in an open economy? What role is played by demand pressure, international competition, and structural factors in the labour market? How important is nominal wage rigidity and exchange rate policy for the medium term evolution of real wages and competitiveness? To answer these questions, we formulate a theoretical model of wage bargaining in an open economy and use it to derive a simple wage equation where all parameters have clear economic interpretations. We estimate the wage equation on data for aggregate manufacturing wages in Denmark, Finland, Norway, and Sweden from the mid 1960s to the mid 1990s.
Subjects: 
Wage formation
efficiency wage
turnover
bargaining
rent sharing
nominal wage rigidity
exchange rate policy
competitiveness
JEL: 
E52
F33
F41
J31
J51
J63
J64
Document Type: 
Working Paper

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