Working Paper: CEPR ID: DP1563
Authors: Assar Lindbeck; Dennis J. Snower
Abstract: The paper examines the implications of an important aspect of the ongoing reorganization of work ? the move from occupational specialization towards multi-tasking ? for centralized wage bargaining. The analysis shows how, on account of this reorganization, centralized bargaining becomes increasingly inefficient and detrimental to firms? profit opportunities, since it prevents firms from offering their employees adequate incentives to perform the appropriate mix of tasks. The paper also shows how centralized bargaining inhibits firms from using wages to induce workers to learn how to use their experience from one set of tasks to enhance their performance at other tasks. In this way, the paper helps explain the increasing resistance to centralized bargaining in various advanced market economies.
Keywords: Centralized Wage Bargaining; Restructuring; Organization of Firms; Technological Change; Information Flows; Employment; Wage Formation; Unemployment
JEL Codes: D23; J24; J31; J51; J53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shift from occupational specialization to multitasking (J29) | efficiency costs of centralized bargaining (J52) |
| centralized bargaining (J52) | wage uniformity (J31) |
| wage uniformity (J31) | firms' ability to incentivize multitasking (M52) |
| increase in the number of occupational clusters (J24) | firms' ability to incentivize multitasking (M52) |
| centralized bargaining (J52) | misalignment of incentives (D82) |
| misalignment of incentives (D82) | firms' profit opportunities (L21) |