Wage bargaining structure, employment and economic integration

It is widely believed that the integration of European economies will have little impact on labor mobility. This does not mean, however, that European labour markets will be unaffected by the process of economic integration. In this paper we show that, with increased competition resulting from closer economic integration, the hump-shaped pattern summarising the relationship between economic performance and the degree of centralisation in wage bargaining (Calmfors and Driffill, 1988) flattens out. As a consequence, the importance of where a particular economy stands on the wage bargaining scale diminishes. -Authors