Wage‐setting coordination in a small open economy
Juvonen, P. (2023). Wage‐setting coordination in a small open economy. Scandinavian Journal of Economics, 125(1), 253-286. https://doi.org/10.1111/sjoe.12495
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Scandinavian Journal of EconomicsAuthors
Date
2023Copyright
© 2022 The Authors. The Scandinavian Journal of Economics published by John Wiley & Sons Ltd on behalf of Föreningen för utgivande av the SJE.
This paper studies wage-setting coordination in a two-sector, open economy dynamic stochastic general equilibrium model. Two large sectoral unions anticipate the effects of their wage demands on aggregate variables. In an open economy, there are externalities that the unions can take into account to increase aggregate welfare, but the strategic interaction between the sectoral unions tends to erode this gain. When wage coordination takes place through a wage norm set by either of the sectors, this minimizes the strategic interaction. However, wage norms create welfare losses as sector-specific wage adjustment is required to make an efficient adjustment to shocks.
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WileyISSN Search the Publication Forum
0347-0520Keywords
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https://converis.jyu.fi/converis/portal/detail/Publication/172628760
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Additional information about funding
Financial support from the Yrjö Jahnsson Foundation, the Emil Aaltonen Foundation, the OP Group Research Foundation and the Finnish Cultural Foundation is acknowledged.License
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