Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/49482
Authors: 
Calmfors, Lars
Larsson, Anna
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Labour Markets 3510
Abstract: 
Pattern bargaining with the tradables (manufacturing) sector as wage leader is a common form of wage bargaining in Europe. We question the conventional wisdom that such bargaining produces wage restraint. In our model all forms of pattern bargaining give the same outcomes as uncoordinated bargaining under inflation targeting. Under monetary union wage leadership for the non-tradables sector is conducive to wage restraint, whereas wage leadership for the tradables sector is not. Comparison thinking may lead the follower to set the same wage as the leader. Such equilibria can arise when the leader sector is the smaller sector and promote high employment.
Subjects: 
pattern bargaining
wage setting
inflation targeting
monetary regimes
JEL: 
E24
J50
Document Type: 
Working Paper

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