No. 6/2003
WAGE BARGAINING AND POLITICAL STRENGTH IN
THE PUBLIC SECTOR
Torberg Falch
Bjarne Strøm
Abstract:
This paper analysis the link between political strength and public sector
wages using a unique matched individual-employer data set for Norwegian
local governments during the period 1990-1998. The results indicate that
political strength, measured in several ways, has a positive effect on
wages, while administrative strength, measured by the tenure of the chief
executive, has a negative effect. The positive effect of political strength
is consistent with a model in which the budgetary process is a multistage
game and employment is determined in an interaction with interest groups
prior to the wage bargain.
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