The effects of the decentralization of collective bargaining on wages and wage dispersion: Evidence from the Finnish forest and IT industries

Recently, Finnish forest industries shifted from sectoral collective bargaining to firm-level bargaining, and the IT services industry shifted to a hybrid of sector- and firm-level bargaining. Using administrative data on monthly wages and the synthetic difference-in-differences method, I study the causal effects of collective bargaining decentralization on the level and dispersion of wages. Despite the substantial change in the level of collective bargaining, I generally find muted effects on the level and dispersion of wages. I find positive and economically and statistically significant effects on wage levels and within-firm wage dispersion only for blue-collar workers in the paper industry.

Automated summary

This study examines the effects of collective bargaining decentralization on wage levels and dispersion using the Finnish forest and IT services industries as case studies. The findings suggest that despite significant changes in the level of collective bargaining, the impact on wage levels and dispersion is generally muted, with only blue-collar workers in the paper industry experiencing significant effects.