Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/19113 
Year of Publication: 
2006
Series/Report no.: 
CESifo Working Paper No. 1649
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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 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: 
J31
F41
F33
E52
J64
J63
J51
Document Type: 
Working Paper
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