The impact of collective bargaining on employment and wage inequality: Evidence from a new taxonomy of bargaining systems

To study the link between different types of collective bargaining systems and employment, unemployment and wage inequality, I use a novel taxonomy of bargaining systems in 36 OECD countries between 1980 and 2015. The results show that coordinated bargaining systems are associated with higher employment, better integration of vulnerable groups and lower wage inequality than fully decentralized systems. Uncoordinated centralized systems perform similarly in terms of unemployment to fully decentralized systems but are associated with higher employment and lower wage inequalities. These results suggest that the link between decentralization and good labour market outcomes is more nuanced than previously suggested.