Affordable Access

Publisher Website

Wage inflation and labour conflicts in the Netherlands:An empirical investigation using the co-integration approach

Authors
Journal
European Journal of Political Economy
0176-2680
Publisher
Elsevier
Publication Date
Volume
8
Issue
4
Identifiers
DOI: 10.1016/0176-2680(92)90039-j
Disciplines
  • Political Science

Abstract

Abstract The ‘wage space’, which is defined as the sum of price inflation and labour productivity growth, has played a major role as an indicator of allowable wage increases in the post-war wage negotiations in the Netherlands. This paper shows that: (a) wages and the wage space are co-integrated; (b) the deviation between wages and the wage space may act as an error correction term in the wage equation when both variables are identified as I(2); and (c) political consensus and the threat of labour conflicts (rather than actual strike activity) may be identified as the ‘mechanism’ behind this error correction in the wage equation.

There are no comments yet on this publication. Be the first to share your thoughts.