Real and nominal wage adjustment in open economies

Arbeitspapier

How are wages set in an open economy? What role is played by demand pressure, international competition, and structural factors in the labour market? How important is nominal wage rigidity and exchange rate policy for the medium term evolution of real wages and competitiveness? To answer these questions, we formulate a theoretical model of wage bargaining in an open economy and use it to derive a simple wage equation where all parameters have clear economic interpretations. We estimate the wage equation on data for aggregate manufacturing wages in Denmark, Finland, Norway, and Sweden from the mid 1960s to the mid 1990s.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2005:23

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; International Monetary Arrangements and Institutions ; Open Economy Macroeconomics ; Wage Level and Structure; Wage Differentials ; Trade Unions: Objectives, Structure, and Effects ; Labor Turnover; Vacancies; Layoffs ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Wage formation ; efficiency wage ; turnover ; bargaining ; rent sharing ; nominal wage rigidity ; exchange rate policy ; competitiveness ; Offene Volkswirtschaft ; Reallohn ; Lohnbildung ; Lohnrigidität ; Gewerkschaft ; Wechselkurs ; Schätzung ; Nordeuropa ; Verhandlungsmacht

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Forslund, Anders ; Gottfries, Nils ; Westermark, Andreas
• Event: Veröffentlichung
• (who): Institute for Labour Market Policy Evaluation (IFAU)
• (where): Uppsala
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/78635
• Last update: 10.03.2025, 11:44 AM CET