Department of Economics and Business Economics

Wage dispersion and decentralization of wage bargaining

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  • Christian Møller Dahl, University of Southern Denmark, Denmark
  • D. Le Maire, University of Copenhagen
  • ,
  • Jacob R. Munch, Økonomisk Institut, Københavns Universitet, Denmark
This article studies how decentralization of wage bargaining from sector to firm level influences wage levels and wage dispersion. We use detailed panel data covering a period of decentralization in the Danish labor market. The decentralization process provides variation in the individual worker's wage-setting system that facilitates identification of the effects of decentralization.We find a wage premium associated with firm-level bargaining relative to sector-level bargaining and that the return to skills is higher under the more decentralized wage-setting systems. Using quantile regression, we also find that wages aremore dispersed under firm-level bargaining compared tomore centralized wage-setting systems.
Original languageEnglish
JournalJournal of Labor Economics
Pages (from-to)501-533
Number of pages33
Publication statusPublished - 1 Jul 2013

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