Scandinavian Working Papers in Economics
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Swedish Institute for Social Research, Stockholm University Working Paper Series, Swedish Institute for Social Research, Stockholm University

No 3/2006:
The outcome of individual wage bargaining and the influence of managers' bargaining power: evidence from union data

Lena Granqvist () and Håkan Regnér ()

Abstract: We analyze unique data that identify whether individuals have participated in decentralized wage setting and whether they have negotiated their own wages. Wages are significantly higher for those who have been part of a formalized wage-setting process compared with non-participants, but only in the public sector. Employees who negotiate their own wages have higher wages than non-negotiators. Wages are also significantly higher for those who negotiate with a manager who has the power to set wages, compared with those who negotiate with a manager who has no power over wages. This concerns employees in the public and the private sectors. Quantile regression results reveal that the outcome of individual bargaining increases over the wage distribution. Percentile wage differences are significant only among workers who negotiate with a manager who has the power to set wages. Estimated wage differences between negotiators and non-negotiators are 4.6% on average, 5.6% in the 90th percentile, and 2.3% at the 10th percentile.

Keywords: wage bargaining; earnings equations; decentralized wage setting; quantile regression; (follow links to similar papers)

JEL-Codes: J31; J33; J41; J44; (follow links to similar papers)

24 pages, May 8, 2006

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