Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/227837 
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 2019:17
Publisher: 
Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala
Abstract: 
Despite a global trend of wage decentralization over the past 30 years, we know very little about the labor market implications of decentralized wage determination. A main reason is the lack of exogenous variation in wage regulation linked to detailed outcome data. Using Swedish registry data and exploiting a reform that replaced the fixed national pay scale for teachers with individual wage bargaining, I overcome these issues and provide new evidence on the labor market effects of wage decentralization. The paper presents three sets of empirical results. First, I show that the reform significantly changed the wage structure of teachers. Second, I demonstrate that these wage changes did not affect teacher composition or student outcomes. Finally, I find support for a wage spillover effect to substitute occupations, providing evidence on the dynamics of wage determination across occupations. I argue that the wage spillover effect coupled with the compressed Swedish wage structure likely explains the lack of effects on teacher and student outcomes.
Subjects: 
Wage Regulation
Decentralization
Teacher Labor Market
JEL: 
I20
I28
J31
J45
Document Type: 
Working Paper

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