Hostname: page-component-76fb5796d-vfjqv Total loading time: 0 Render date: 2024-04-25T13:58:30.625Z Has data issue: false hasContentIssue false
  • English
  • Français

Wage-Setting Measures: A Survey and Assessment

Published online by Cambridge University Press:  13 June 2011

Lane Kenworthy
Lane Kenworthy
Affiliation:
Emory University
Get access

Extract

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.

Type
Research Article
Information
World Politics , Volume 54 , Issue 1 , October 2001 , pp. 57 - 98
Copyright
Copyright © Trustees of Princeton University 2001

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 On trends, see Hernes, Gudmund, “The Dilemmas of Social Democracies: The Case of Norway and Sweden,” Acta Sociologica 34, no. 4 (1991)CrossRefGoogle Scholar; Regini, Marino, “Between Deregulation and Social Pacts: The Responses of European Economies to Globalization,” Politics and Society 28 (March 2000)CrossRefGoogle Scholar; Wallerstein, Michael and Golden, Miriam, “The Fragmentation of the Bargaining Society: Wage Setting in the Nordic Countries, 1950 to 1992,” Comparative Political Studies 30 (December 1997)CrossRefGoogle Scholar. On causes, see Iversen, Torben, “Power, Flexibility, and the Breakdown of Centralized Wage Bargaining,” Comparative Politics 28 (July 1996)CrossRefGoogle Scholar; Swensen, Peter, Fair Shares: Unions, Pay, and Politics in Sweden and West Germany (Ithaca, N.Y.: Cornell University Press, 1989), chap. 2Google Scholar; Western, Bruce, Between Class and Market: Postwar Unionization in the Capitalist Democracies (Princeton: Princeton University Press, 1997), chap. 10Google Scholar. On effects on macroeconomic performance, see, for references, Flanagan, Robert J., “Macroeconomic Performance and Collective Bargaining: An International Perspective,” Journal of Economic Literature 37 (September 1999)CrossRefGoogle Scholar. On effects on the level and distribution of earnings, see Rueda, David and Pontusson, Jonas, “Wage Inequality and Varieties of Capitalism,” World Politics 52 (April 2000)CrossRefGoogle Scholar; Wallerstein, Michael, “Wage-Setting Institutions and Pay Inequality in Advanced Industrial Societies,” American Journal of Political Science 43 (July 1999)CrossRefGoogle Scholar; Western, Bruce and Healy, Kieren, “Explaining the OECD Wage Slowdown: Recession or Labor Decline?” European Sociological Review 15 (September 1999)CrossRefGoogle Scholar.

2 Here and throughout the terms “measure” and “indicator” and used interchangeably.

3 Garrett, and Way, , “Public Sector Unions, Corporatism, and Macroeconomic Performance,” Comparative Political Studies 32 (June 1999), 415CrossRefGoogle Scholar.

4 Cameron, David R., “Social Democracy, Corporatism, Labour Quiescence, and the Representation of Economic Interest in Advanced Capitalist Society,” in Goldthorpe, John H., ed., Order and Conflict in Contemporary Capitalism (Oxford: Clarendon Press, 1984)Google Scholar; Hibbs, Douglas A. Jr., “Industrial Conflict in Advanced Industrial Societies,” American Political Science Review 70 (December 1976)CrossRefGoogle Scholar.

5 Cameron (fn. 4), 164.

6 Calmfors, Lars and Driffill, John, “Bargaining Structure, Corporatism, and Macroeconomic Performance,” Economic Policy 6 (April 1988)Google Scholar.

7 OECD (Organization for Economic Cooperation and Development), “Collective Bargaining: Levels and Coverage,” in OECD Employment Outlook (Paris: OECD, 1994)Google Scholar; idem, “Economic Performance and the Structure of Collective Bargaining,” in OECD Employment Outlook (Paris: OECD, 1997)Google Scholar.

8 Golden, , Lange, , and Wallerstein, , “Union Centralization among Advanced Industrial Societies: An Empirical Study” (Data set, www.shelley.polisci.ucla.edu/data, version dated November 2, 1998)Google Scholar.

9 Iversen, , Contested Economic Institutions (New York: Cambridge University Press, 1999)Google Scholar.

10 Traxler, , Blaschke, , and Kittel, , National Labour Relations in Internationalized Markets (New York: Oxford University Press, 2001)CrossRefGoogle Scholar.

11 See, e.g., Kenworthy, Lane, “Unions, Wages, and the Common Interest,” Comparative Political Studies 28 (January 1996)CrossRefGoogle Scholar; idem, “Corporatism and Unemployment in the 1980s and 1990s” (Manuscript, Department of Sociology, Emory University, 2001)Google Scholar; Traxler et al. (fn. 10).

12 Visser, , “In Search of Inclusive Unionism,” Bulletin of Comparative Labour Relations 18 (1990)Google Scholar.

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.

23 See Hibbs, Douglas A. Jr., and Locking, Hakan, “Wage Compression, Wage Drift, and Wage Inflation in Sweden,” Labour Economics 3 (September 1996)CrossRefGoogle Scholar.

24 Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, and the United States.

25 Soskice, , “Wage Determination: The Changing Role of Institutions in Advanced Industrialized Countries,” Oxford Review of Economic Policy 6 (Winter 1990)CrossRefGoogle Scholar.

26 , Crouch, “Conditions for Trade Union Wage Restraint,” in Lindberg, Leon N. and Maier, Charles S., eds., The Politics of Inflation and Economic Stagnation (Washington, D.C.: Brookings Institution, 1985)Google Scholar; Romanis, , “Cost Inflation and Incomes Policy in Industrial Countries,” International Monetary Fund Staff Papers 14 (March 1967)Google Scholar. I do not include the Romanis measure here because it appears not to have been used in empirical analyses.

27 Layard, , Nickell, , and Jackman, , Unemployment: Macroeconomic Performance and the Labor Market (New York: Oxford University Press, 1991)Google Scholar; Layard, and Nickell, , “Unemployment in the OECD Coun-tries,” in Tachibanaki, Toshiaki, ed., Labour Market and Economic Performance (New York: St. Martin’s Press, 1994)Google Scholar; Nickell, , “Unemployment and Labor Market Rigidities: Europe versus North America,” Journal of Economic Perspectives 11 (Summer 1997)CrossRefGoogle Scholar; Hall, and Franzese, , “Mixed Signals: Central Bank Independence, Coordinated Wage Bargaining, and European Monetary Union,” International Organization 52 (Summer 1998)CrossRefGoogle Scholar.

28 OECD (fn. 7,1997) .

29 Soskice (fn. 25), 55.

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

31 Ibid., 148.

32 Ibid.

33 Kenworthy, Lane, “Wage Setting Coordination Scores” (Manuscript, Department of Sociology, Emory University, http://www.emory.edu/SOC/lkenworthy, 2001)Google Scholar. These scores revise and extend the wage coordination scores in Hicks, Alexander and Lane, Kenworthy, “Cooperation and Political Economic Performance in Affluent Democratic Capitalism,” American Journal of Sociology 103 (May 1998), 1642CrossRefGoogle Scholar.

34 See, e.g., Powell, Walter W. and Di Maggio, Paul J., eds., The New Institutionalism in Organizational Analysis (Chicago: University of Chicago Press, 1991)Google Scholar.

35 See Budge, Ian, “Expert Judgements of Party Policy Positions: Uses and Limitations in Political Research,” European Journal of Political Research 37 (January 2000)CrossRefGoogle Scholar; Forder, James, “Some Methodological Issues in the Statutory Characterization of Central Banks,” West European Politics 24 (January 2001)CrossRefGoogle Scholar; Bertola, Giuseppe, Boeri, Tito, and Cazes, Sandnne, Employment Protection and Labour Market Adjustment in OECD Countries: Evolving Institutions and Variable Enforcement, Employment and Training Paper no. 48 (Geneva: International Labour Organization, 1999)Google Scholar.

36 Traxler, and Kittel, , “The Bargaining System and Performance: A Comparison of Eighteeen OECD Countries,” Comparative Political Studies 33 (November 2000)CrossRefGoogle Scholar.

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

38 Lansbury, Russell and Niland, John, “Managed Decentralization? Recent Trends in Australian Industrial Relations and Human Resource Policies,” in Locke, Richard, Kochan, Thomas, and Piore, Michael, eds., Employment Relations in a Changing World Economy (Cambridge: MIT Press, 1995)Google Scholar; Schwartz, Herman M., “Internationalization and Two Liberal Welfare States: Australia and New Zealand,” in Scharpf, Fritz W. and Schmidt, Vivien A., eds., Welfare and Work in the Open Economy, vol. 2, Diverse Responses to Common Challenges (New York: Oxford University Press, 2000)Google Scholar.

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.

42 E.g., Bruno, Michael and Sachs, Jeffrey D., Economics of Worldwide Stagflation (Cambridge: Harvard University Press, 1985)CrossRefGoogle Scholar; Garrett and Way (fn. 3); Golden, Miriam, “The Dynamics of Trade Unionism and National Economic Performance,” American Political Science Review 87 (June 1993)CrossRefGoogle Scholar; Headey, Bruce W., “Trade Unions and National Wage Policies,” Journal of Politics 32 (May 1970)CrossRefGoogle Scholar; Ken-worthy (fn. 11,1996).

43 Olson, Mancur, The Rise and Decline of Nations (New Haven: Yale University Press, 1982)Google Scholar.

44 Lange, , Wallerstein, , and Golden, , “The End of Corporatism? Wage Setting in the Nordic and Germanic Countries,” in Jacoby, Sanford, ed., The Workers of Nations (New York: Oxford University Press, 1995), 80–87Google Scholar.

45 Golden, Lange, and Wallerstein (fn. 8).

46 Calmfors and Driffill (fn. 6); Hall and Franzese (fn. 27); Alvarez, R. Michael, Garrett, Geoffrey, and Lange, Peter, “Government Partisanship, Labor Organization, and Macroeconomic Performance,” American Political Science Review 85 (June 1991)CrossRefGoogle Scholar; Garrett, , Partisan Politics in the Global Economy (New York: Cambridge University Press, 1998)CrossRefGoogle Scholar; Kittel, Bernhard, “Trade Union Bargaining Horizons in Comparative Perspective: The Effects of Encompassing Organization, Unemployment, and the Monetary Regime on Wage Pushfulness,” European Journal of Industrial Relations 6 (June 2000)CrossRefGoogle Scholar; Garrett and Way (fn. 3).

47 Cukierman, Alex and Lippi, Francesco, “Central Bank Independence, Centralization of Wage Bar-gaining, Inflation, and Unemployment: Theory and Some Evidence,” European Economic Review 43 (June 1999)CrossRefGoogle Scholar; Iversen (fn. 9).

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 http://www-personal.umich.edu/~franzese/ h8cf_data.TXT. The unemployment data are also from this source.

49 Beck, Nathaniel and Katz, Jonathan N., “What to Do (and Not to Do) with Time-Series Cross-Section Data,” American Political Science Review 89 (September 1995)CrossRefGoogle Scholar.

50 See Achen, Christopher, “Why Lagged Dependent Variables Can Suppress the Explanatory Power of Other Independent Variables” (Manuscript, Department of Political Science, University of Michigan, 2000)Google Scholar; Beck and Katz (fn. 49), 645.

51 Beck, Nathaniel and Katz, Jonathan N., “Throwing Out the Baby with the Bath Water: A Comment on Green, Kim, and Yoon,” International Organization 55 (Spring 2001)CrossRefGoogle Scholar; Traxler, Blaschke, and Kittel (fn. 10), 27–28.

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

53 Flanagan (fn. 1); Franzese, Robert J. Jr., “The Interaction of Credibly Conservative Monetary Policy with Labor- and Goods-Market Institutions: A Review of an Emerging Literature” (Manuscript, Department of Political Science, University of Michigan, 1999)Google Scholar; Iversen (fn. 9).

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

55 OECD, “Disparities in Regional Labour Markets,” in OECD Employment Outlook (Paris: OECD, 2000)Google Scholar; Streeck, Wolfgang and Schmitter, Philippe C., “From National Corporatism to Transnational Pluralism: Organized Interests in the Single European Market,” Politics and Society 19 (June 1991)CrossRefGoogle Scholar.

56 Cawson, Alan, ed., Organized Interests and the State: Studies in Meso-Corporatism (Beverly Hills, Calif.: Sage, 1985)Google Scholar.