TY - JOUR

T1 - Collective wage bargaining and the role of institutional stability

T2 - a cross-national comparison of macroeconomic performance

AU - Brandl, Bernd

AU - Ibsen, Christian Lyhne

PY - 2019

Y1 - 2019

N2 - Since the advent of the economic crisis, interest in the efficacy of collective wage bargaining institutions has increased as the labour market was required to bear the burden of economic adjustment and became an important policy-field for institutional reform in many countries. In this article, the role of institutional stability, trust and certainty for the efficacy of collective bargaining systems is investigated and their effects on macroeconomic outcomes—inflation and unemployment—are analysed. We argue that stability of the institutional framework of collective bargaining is of major importance for its efficacy as it reduces uncertainty and provides the necessary basis for trust among bargaining actors. Thus, we hypothesise that institutional change and instability are associated with significant transaction costs and have, at least temporarily, negative effects on economic outcomes. The hypotheses are confirmed by an empirical analysis, which uses data of 34 industrialised countries from 1965 to 2014.

AB - Since the advent of the economic crisis, interest in the efficacy of collective wage bargaining institutions has increased as the labour market was required to bear the burden of economic adjustment and became an important policy-field for institutional reform in many countries. In this article, the role of institutional stability, trust and certainty for the efficacy of collective bargaining systems is investigated and their effects on macroeconomic outcomes—inflation and unemployment—are analysed. We argue that stability of the institutional framework of collective bargaining is of major importance for its efficacy as it reduces uncertainty and provides the necessary basis for trust among bargaining actors. Thus, we hypothesise that institutional change and instability are associated with significant transaction costs and have, at least temporarily, negative effects on economic outcomes. The hypotheses are confirmed by an empirical analysis, which uses data of 34 industrialised countries from 1965 to 2014.

KW - Labour market

KW - Collective bargaining institutions

KW - Institutional change

KW - Transaction costs

KW - Uncertainty

U2 - 10.1093/cje/bey041

DO - 10.1093/cje/bey041

M3 - Journal article

VL - 43

SP - 677

EP - 694

JO - Cambridge Journal of Economics

JF - Cambridge Journal of Economics

SN - 0309-166X

IS - 3

ER -