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Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements

L. N. Christofides¹; Andrew J. Oswald^2,3

¹ University of Guelph · ² Dartmouth College · ³ London School of Economics and Political Science

The microeconomic forces that influence real wages are not fully understood. This paper studies pay determination using data on approximately 600 labor contracts. It finds that the real wage is an increasing function of past profitability in the employer's industry, and a decreasing function of the level of unemployment in the employer's region. These results are consistent with rent-sharing theories.

DOI

10.2307/2118371

Volume

107 (3)

Pages

985-1002

Language

en

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