Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/63146
Authors: 
Barth, Erling
Bratsberg, Bernt
Naylor, Robin A.
Raaum, Oddbjørn
Year of Publication: 
2002
Series/Report no.: 
Memorandum, Department of Economics, University of Oslo 2002,03
Abstract: 
This paper presents both theoretical analysis and econometric evidence for the United States, Great Britain and Norway on the extent to which hourly wages of different groups of workers are sensitive to local labour market conditions. We focus on differences by union status. Our theoretical framework captures both a turnover-based efficiency wage mechanism and one originating in union-firm bargaining. Under fairly general conditions, we show that wages are less sensitive to local unemployment the higher is the bargaining power of the union. In accordance with this theoretical prediction, we find that the absolute value of the elasticity of wages with respect to unemployment is higher in the nonunion sector than in the union sector for all three countries. We interpret the evidence as giving support to an efficiency wage interpretation of the wage curve.
Subjects: 
Wage curves
efficiency wages
bargaining
JEL: 
J31
J41
J51
Document Type: 
Working Paper

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