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Wage-Setting Measures: A Survey and Assessment

Published online by Cambridge University Press:  13 June 2011

Lane Kenworthy
Emory University


Wage setting has been one of the most heavily studied institutions in the field of comparative political economy over the past two decades, and quantitative measures of wage-setting arrangements have played a major role in this research. Yet the proliferation of such measures in recent years presents researchers with a sizable array from which to choose. In addition, some scholars are rather skeptical about the validity and/or reliability of these measures. This article offers a survey and assessment of fifteen wage-setting measures. It attempts to answer questions about (1) how these indicators differ from one another in conceptualization and measurement strategy; (2) which are the most valid and reliable; (3) the strengths and weaknesses of measures of wage centralization versus those of wage coordination; (4) particular countries or time periods for which there are noteworthy discrepancies in scoring; (5) how sensitive empirical findings are to the choice of wage-setting measure.

Research Article
Copyright © Trustees of Princeton University 2001

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13 In the theoretical framework developed by Iversen (fn. 9), the aim is to examine the effects of wage determination on wage restraint (and thereby on unemployment). Yet the proclivity of various wage-bargaining structures to generate such restraint is hypothesized to be partly a function of unions’ interest m pursuing pay equality (“wage solidarity”). In this type of model it makes sense to use a measure of centralization of wage bargaining and to include a measure of government involvement in the wage-setting process as a separate variable in the regression analyses.

14 Iversen (fn. 9), 49.

15 Ibid., 84–85.

16 Flanagan, Robert J., “Centralized and Decentralized Pay Determination in Nordic Countries,” in Calmfors, Lars, ed., Wage Formation and Macroeconomic Policy in the Nordic Countries (New York: Oxford University Press, 1990), 398Google Scholar;Traxler, Blaschke, and Kittel (fn. 10) 127.

17 OECD (fn. 7,1997).

18 Iversen (fn. 9), 55, 86.

19 Traxler, Blaschke, and Kittel (fn. 10) have also created a separate, dichotomous indicator of “bargaining governability,” which refers to the presence or absence of sanctions on lower-level bargaining (p. 184).

20 Ibid., 112–13.

21 Ibid., 307.

22 Ibid., 112.

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28 OECD (fn. 7,1997) .

29 Soskice (fn. 25), 55.

30 Traxler, Blaschke, and Kittel (fn. 10), chap. 10.

31 Ibid., 148.

32 Ibid.

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37 Iversen (fn. 9), 49, 51, 83.

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39 Regalia, Ida and Regini, Marino, “Italy: The Dual Character of Industrial Relations,” in Ferner, Anthony and Hyman, Richard, eds., Changing Industrial Relations in Europe, 2d ed. (Oxford: Blackwell, 1999)Google Scholar.

40 Personal communication with Bemhard Kittel.

41 The coordination index assigns very high scores to the United States and Canada in certain years in the 1970s, whereas the centralization measures are consistently low for these two countries. That is because the U.S. and Canada each briefly imposed wage-price controls accompanied by a peace clause—a form of state-imposed coordination.

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48 Hall and Franzese (fn. 27). These variables and their original data sources are described in the Hall and Franzese article, and the data are available at h8cf_data.TXT. The unemployment data are also from this source.

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52 For discussion, see Hall and Franzese (fn. 27).

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54 E.g., Traxler, Blaschke, and Kittel (fn. 10); and Western (fn. 1).

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