A generalised wage rigidity result

This paper provides an alternative explanation of the empirically observed wage rigidity in industrialized economies. We provide sufficient conditions under which the negotiated wage in unionized imperfectly competitive industries is independent of a number of product market features, as well as of the bargaining institution (Right-to-Manage or Efficient Bargains), as long as negotiations are centralised at the industry level. The wage rate turns out to be the same independently of e.g. the number of firms, the degree of product substitutability, or the intensity of market competition, and this result is shown to hold in a broad class of industry specifications widely used in the literature. (C) 2002 Elsevier Science B.V. All rights reserved.