The
Impact of Economic Integration
on European Wage-Setting Institutions
Michael
Wallerstein
Abstract
It is common today to argue that centralized bargaining
institutions in Western Europe are being undermined by the creation
of a single European market for two reasons. First, economic integration
may eliminate unions' ability to obtain monopoly rents through centralized
bargaining. Second, economic integration may undermine the corporatist
bargains that sustain centralization at the national level. In this
paper, both arguments are considered and found to be unconvincing.
In Europe, as opposed to the United States, the purpose of centralized
bargaining was to lower wages, not raise them. Moreover, employers
gained from centralized bargaining in ways that are independent
of corporatist bargaining at the national level. I conclude that
the decline of centralized bargaining is less general than is commonly
thought, and is due to country-specific factors that are largely
independent of economic integration where decentralization is occurring.
Michael Wallerstein,
Department of Political Science, Northwestern University
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