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
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