The individual outcome of decentralized wage formation in Sweden

This study exploits unique survey data collected by the Swedish unions for graduate professionals to analyze the individual outcome of decentralized wage bargaining. Comparing individuals who have been part of a pay review process at the local level initiated by the union and employer organizations we find that those who are part of the process in both private and public sectors have higher wages than those who are not part of the process.

The results also show that wages are significantly lower for individuals who do not negotiate their wages compared with those who negotiate themselves. Wages are significantly higher for individuals who negotiate with a manager who has the power to set wages compared to those who negotiate with a manager who is not allowed to set wages. Quantile regression results show that the outcome of participation in the pay review talks decreases significantly over the wage distribution, while the outcome of individual wage bargaining increases significantly over the distribution.