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Econometrics 2017, 5(1), 6; doi:10.3390/econometrics5010006

Between Institutions and Global Forces: Norwegian Wage Formation Since Industrialisation

1
Department of Economics, University of Oslo, POB 1095 0317 Oslo, Norway
2
Centre for Wage Formation at Economic Analysis, POB 0650, Oslo, Norway
Paper presented at the workshop Macroeconomics and Policy Making, arranged in honour of Asbjørn Rødseth, 18 May, 2016, by the Department of Economics, University of Oslo. Thanks to Olav Bjerkholt for comments, and for showing me the article written by Frisch about “rational wage policies”, and the correspondence with Haavelmo that it led to. Discussions at the Workshop in econometrics at Statistics Norway, 21 October 2016, were also very useful, thanks to the participants. Thanks also to Jan Morten Dyrstad, David F. Hendry , Steinar Holden, Tord S. Krogh and Mikkel Myhre Walbækken for important comments and suggestions. Finally, thanks to the editors and to two anonymous referees for their comments, both critical and constructive. The numerical results in this paper were obtained by the use of OxMetrics 7/PcGive 14 and Eviews 9.5.
Academic Editors: Gilles Dufrénot, Fredj Jawadi and Alexander Mihailov
Received: 31 August 2016 / Revised: 9 December 2016 / Accepted: 13 December 2016 / Published: 12 January 2017

Abstract

This paper reviews the development of labour market institutions in Norway, shows how labour market regulation has been related to the macroeconomic development, and presents dynamic econometric models of nominal and real wages. Single equation and multi-equation models are reported. The econometric modelling uses a new data set with historical time series of wages and prices, unemployment and labour productivity. Impulse indicator saturation is used to achieve robust estimation of focus parameters, and the breaks are interpreted in the light of the historical overview. A relatively high degree of constancy of the key parameters of the wage setting equation is documented, over a considerably longer historical time period than earlier studies have done. The evidence is consistent with the view that the evolving system of collective labour market regulation over long periods has delivered a certain necessary level of coordination of wage and price setting. Nevertheless, there is also evidence that global forces have been at work for a long time, in a way that links real wages to productivity trends in the same way as in countries with very different institutions and macroeconomic development. View Full-Text
Keywords: wage formation; economic history of Norway; structural breaks; labour market regulation; econometric models of inflation wage formation; economic history of Norway; structural breaks; labour market regulation; econometric models of inflation
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Nymoen, R. Between Institutions and Global Forces: Norwegian Wage Formation Since Industrialisation. Econometrics 2017, 5, 6.

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