Bargaining, Compensating Wage Differentials, and Dualism of the Labor Market: Theory and Evidence for France

Christophe Daniel (1) , Catherine Sofer (1)

1 LEO - Laboratoire d'économie d'Orleans [2008-2011]

The theory of compensating differentials predicts a negative relationship between wages and good working conditions, while the theory of segmentation predicts a positive one. Combining the hedonic wage model and the wages‐employment collective bargaining model, we show the relevance of a further factor: a union power effect. Then we test the validity of this effect with French cross‐section data. Empirical results confirm the predictions of the model, that is, the coexistence of a negative relationship between wages and good working conditions for the whole sample (market effect) and a positive relationship in highly unionized sectors (union power effect).

Mots clés: Compensating Wage Differentials

Domaines: Economies et finances

Christophe Daniel, Catherine Sofer. Bargaining, Compensating Wage Differentials, and Dualism of the Labor Market: Theory and Evidence for France. Journal of Labor Economics, 1998, 16 (3), pp.546-575. ⟨10.1086/209898⟩. ⟨halshs-00367153⟩