1 9. Jahrgang (1 993), Heft 4 Wirtschaft und Gesellschaft 
The Economic Performance of 
Different Bargaining Institutions: 
A Survey of the Theoretical Literature 
Karl Ove Moene, Michael Wallerstein 
1. lntroduction 
Until the 1970s, the effects of the structure of union organization and 
collective bargaining on economic performance attracted little attention 
outside of the field of industrial relations. While researchers puzzled 
over why some countries had higher rates of industrial conflict than 
others, or why union cooperation with voluntary incomes policies see­
med easily achieved in some countries and impossible elsewhere, there 
were relatively few attempts to connect differences in labor market in­
stitutions with differences in aggregate economic performance (1) .  The 
reason was simple. In the halcyon days of the 1960s, there was little va­
riation in economic performance to explain among advanced industrial 
societies. Full employment and real wage growth was achieved through­
out Western Europe. From an economic point of view, the differences 
between the institutions of wage setting of different countries seemed re­
latively unimportant. 
In the past two decades, the comparative study of wage setting prac­
tices and institutions in advanced industrial societies has become a 
growth industry within the disciplines of economics, political science 
and sociology. This increased attention to cross-national variations in la­
bor market institutions reflects both the general decline and the greater 
variance of macroeconomic performance since the mid 1970s. In particu­
lar, a remarkable divergence between members of the European Commu­
nity (EC) and members of the European Free Trade Association (EFTA) 
appeared. While average unemployment in the nine EC members since 
1973 rose in two jumps, first to over 6 per cent in 1973-75 and then to 
423