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Recherches Économiques de Louvain/ Louvain Economic Review (1)

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Wage Interdependence and Competitiveness
David de la Croix
Journal:

Recherches Économiques de Louvain/ Louvain Economic Review / Volume 59 / Issue 4 / 1993

Published online by Cambridge University Press:

17 August 2016, pp. 395-425

Print publication:

1993
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We build a multi-sector model with wage bargaining and imperfect competition to analyse the links between wage interdependence and competitiveness. Quantity constraints together with union power, firm market power and wage externalities play a significant role in the determination of competitiveness and in the transmission of shocks among sectors. This is verified by an empirical study on Belgian data. We identify leading sectors in wage formation and evaluate the effect of sector-specific shocks on the competitiveness of the other sectors.