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Cited by 126Labor market dynamics and wage inequalityLabor Movements and UnionsEmployment, Labor, and Gender Studies

Wage Dispersion and Decentralization of Wage Bargaining

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Dahl, Christian M., le Maire, Daniel, Munch, Jakob R.·2013·Journal of Labor Economics
DOI 10.1086/669339
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Abstract

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 are more dispersed under firm-level bargaining compared to more centralized wage-setting systems.

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  • Denmark has a flexible labor market with low hiring/firing costs and decentralized wage setting like the U.S., enabling adjustments in hours and pay after technological shifts.

    “Denmark's labor market is highly flexible, with low hiring and firing costs and decentralized wage bargaining-similar to that of the U.S.-which allows firms and workers to adjust hours and earnings in response to technological change”

    From Still Waters, Rapid Currents: Early Labor Market Transformation under Generative AI (2025) · cites this paper as Dahl, Le Maire and Munch, 2013

    Section 3 says job protection is low in Denmark and documents a shift toward local wage bargaining, partly motivated by technological change and the need for more flexible wage contracts. It does not compare Denmark’s labor market with the U.S. or establish that firms and workers adjust both hours and earnings in response to technological change. No page numbers are available in our copy. (LLM, conf=0.86)

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  38. [42][42] Wallerstein, M. (1999): Wage-Setting Institutions and Pay Inequality in Advanced Industrial Societies, American Journal of Political Economy 43 , pp. 649-680. Table 1: Private sector wage-setting systems 1989-2004 Source: Danish Employers Federation (DA). Table 2: Private sector wage-setting systems 1992-2001, data Table 3: Sample means by wage-setting system, 1992-2001 Note: Samples include all 25-65-year-old full-time workers at plants with at least ve employees in 36 DA/LO bargaining segments. Table 4: Mean log wages by wage-setting system Note: Standardized mean and standard deviation are calculated using the DiNardo et al. (1996) approach. 95% con dence intervals are reported in square brackets. Table 5: Transitions between wage-setting systems, 1992-2001 Table 6: Transition matrix, 1992-2001 Table 7: Linear panel data models Note: All models include industry-year xed e/ects. Standard errors are clustered at the bargaining segment-year level. *** p &lt; 0.01, ** p &lt; 0.05, * p &lt; 0.1. Table 8: Lagged e/ects Note: All models include job-spell xed e/ects, industry-year xed e/ects and all covariates in Table 7. Standard errors are clustered at the bargaining segment-year level. Table 9: Human capital Note: All models include job-spell xed e/ects, industry-year xed e/ects and all covariates in Table 7. Standard errors are clustered at the bargaining segmentyear level. *** p &lt; 0.01, ** p &lt; 0.05, * p &lt; 0.1. Table 10: The quantile regression model with job spell random e/ects (Mundlak) Note: The model includes industry-year xed e/ects. Standard errors are block-bootstrapped at the rm-worker matched level using sub-sampling. The bootstrap uses a subsample size of 10.000 workers and 999 replications. *** p &lt; 0.01, ** p &lt; 0.05, * p &lt; 0.1. <!-- image --> 2011-32: Christian Bach: Conservatism in Corporate Valuation 2011-33: Adrian Pagan and Don Harding: Econometric Analysis and Prediction of Recurrent Events 2011-34: Lars Stentoft: American Option Pricing with Discrete and Continuous Time Models: An Empirical Comparison 2011-35: Rasmus Tangsgaard Varneskov: Flat-Top Realized Kernel Estimation of Quadratic Covariation with Non-Synchronous and Noisy Asset Prices 2011-36: David F. Hendry and Søren Johansen: The Properties of Model Selection when Retaining Theory Variables 2011-37: Torben G. Andersen, Tim Bollerslev, Peter F. Christoffersen and Francis X. Diebold: Financial Risk Measurement for Financial Risk Management 2011-38: Malene Kallestrup-Lamb: The Role of the Spouse in Early Retirement Decisions for Older Workers 2011-39: Torben Schmith, Søren Johansen and Peter Thejll: Statistical analysis of global surface air temperature and sea level using cointegration methods 2011-40: Søren Johansen and Bent Nielsen: Asymptotic theory for iterated one-step Huber-skip estimators 2011-41: Luc Bauwens, Arnaud Dufays and Jeroen V.K. Rombouts: Marginal Likelihood for Markov-switching and Change-point Garch Models 2011-42: Manuel Lukas: Utility-based Forecast Evaluation with Multiple Decision Rules and a New Maxmin Rule 2011-43: Peter Christoffersen, Ruslan Goyenko, Kris Jacobs, Mehdi Karoui: Illiquidity Premia in the Equity Options Market 2011-44: Diego Amaya, Peter Christoffersen, Kris Jacobs and Aurelio Vasquez: Do Realized Skewness and Kurtosis Predict the CrossSection of Equity Returns? 2011-45: Peter Christoffersen and Hugues Langlois: The Joint Dynamics of Equity Market Factors 2011-46: Peter Christoffersen, Kris Jacobs and Bo Young Chang: Forecasting with Option Implied Information 2011-47: Kim Christensen and Mark Podolskij: Asymptotic theory of rangebased multipower variation 2011-48: Christian M. Dahl, Daniel le Maire and Jakob R. Munch: Wage Dispersion and Decentralization of Wage Bargaining

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Authors
Dahl, C. M., le Maire, D., & Munch, J. R.
Affiliations
  • University of Southern Denmark (DK)
  • University of Copenhagen (DK)
ORCID
Venue
Journal of Labor Economics
Publisher
University of Chicago Press
Published
2013-07
Volume
31
Issue
3
Pages
501-533
ISSN
  • 0734-306X (ISSN-L)
  • 1537-5307
DOI
10.1086/669339
OpenAlex
W2742030164
Cited by
126
References
0
Citations by year
2026: 7 · 2025: 19 · 2024: 4 · 2023: 9 · 2022: 11 · 2021: 8 · 2020: 11 · 2019: 8 · 2018: 6 · 2017: 10 · 2016: 11 · 2015: 7 · 2014: 9 · 2013: 3 · 2012: 3
FWCI
23.49
Type
journal article
Language
en
Open access
Locations
  • Journal of Labor Economics (publishedVersion)
  • SSRN Electronic Journal (acceptedVersion)
  • University of Southern Denmark Research Portal (University of Southern Denmark) (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Research at the University of Copenhagen (University of Copenhagen) (submittedVersion, other-oa)
  • Econstor (Econstor) (submittedVersion)
  • Research at the University of Copenhagen (University of Copenhagen) (submittedVersion)
Funders
  • Samfund og Erhverv, Det Frie Forskningsråd
  • National Research Foundation
  • Danmarks Grundforskningsfond
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
  • Social Sciences › Public Administration › Labor Movements and Unions
  • Social Sciences › Safety Research › Employment, Labor, and Gender Studies
Keywords
wage dispersion, firm-level bargaining, wage premium, returns to skills, Danish labour market, collective bargaining

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