Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 700: The Design and Effects of Collectively Agreed Minimum Wages: Evidence from Sweden

Per Skedinger ()
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Per Skedinger: Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Minimum wages in Sweden are collectively agreed and differ by industry. Within agreements, the rates are also highly differentiated. Minimum wages are higher in Sweden than in any of the countries with statutory rates considered in this study. This is line with the view that minimum wages are higher than otherwise when unions are involved in minimum wage setting. The reported results for Sweden do no support the suggestion that adverse employment effects are modest in systems with collectively agreed rates. This runs counter to the hypothesis that unions and employers have a good sense of what constitutes a relevant market wage for unskilled workers and use this information to set minimum wages at appropriate levels.

Keywords: Minimum Wages; Collective Bargaining

JEL-codes: J31; J51; J52

28 pages, March 1, 2007

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