Wage rate systems, wage levels and employment

Abstract

"Differences in the development of wage levels and employment between individual economies are often explained by the institutional structuring of national wage rate systems. Clamping down on wage levels leads to higher levels of employment particularly in decentralised but also in centralised wage rate systems. Theoretical analysis makes it clear that these results depend upon the specifications of the model, but also that wage bonuses introduce an additional element of uncertainty into the analysis of the relationship between degree of centralisation, wage levels and employment levels. Our empirical studies also do not provide any clear answer to the question of which wage rate system has the most favourable effect on wage and employment levels. What is obvious, however, is that in some countries decentralised wage rate systems are subject to a process of erosion and centralised systems can be transformed into less centralised ones. Finally, two reform suggestions for wage rate systems namely, entry-level wages and profit-sharing plans for employees, are discussed." (Author's abstract, IAB-Doku) ((en))

Cite article

Gerlach, K. & Meyer, W. (1995): Tarifverhandlungssysteme, Lohnhöhe und Beschäftigung. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 28, No. 3, p. 383-390.