Macroeconomic outcomes, collective bargaining and intersectoral productivity differentials: a panel approach

Using a sample of 19 advanced countries from 1990 to 2014 and an Arellano – Bover-Blundell – Bond linear dynamic GMM estimator along with a bootstrap-based bias correction fixed effects estimator for dynamic panels, the paper examines the macroeconomic impact of collective bargaining structures in a context of varying intersectoral heterogeneity in productivity growth among the exposed and sheltered sectors of the economy. Results show a dampening impact of pattern and centralised bargaining structures on unemployment. However, strong domestic demand is a key precondition for such a favourable effect to materialise. Uncoordinated and centralised bargaining structures are the most efficient in terms of labour cost restraint while industry bargaining moderates labour cost growth as intersectoral productivity differentials widen.