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University of Stirling



Insider power in wage determination

Blanchflower D, Oswald AJ & Garrett MD (1990) Insider power in wage determination. Economica, 57 (226), pp. 143-170.

The paper argues that wage determination is best seen as a kind of rent-sharing in which workers' bargaining power is influenced by conditions in the external labour market. It uses British establishment data from 1984 to show that pay depends upon a blend of insider pressure (including the employer's financial performance and oligopolistic position) and outsider pressure (including external wages and unemployment). Lester's feasible "range" of wages appears typically to be between 8 and 22% of pay. Estimates of the unemployment elasticity of the wage lie in a narrow band around -0.1.

bargaining power; insider power; labour market; wage determination; workers

Economica: Volume 57, Issue 226

Author(s)Blanchflower, David; Oswald, Andrew J; Garrett, Mario D
Publication date31/05/1990
PublisherWiley-Blackwell for the London School of Economics and Political Science
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