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European Sociological Review 15:233-249 1999
© 1999 Oxford University Press


research-article

Explaining the OECD Wage Slowdown Recession or Labour Decline?

Bruce Western and Kieran Healy

Department of Sociology 2-N-2 Green Hall, Princeton University Princeton NJ 08544-1010, USA.

Wage growth slowed significantly in OECD countries in the 1980s and 1990s. Market explanations trace the wage slowdown to a recession characterized by inflationary shocks, high unemployment, and slow productivity growth. Institutional accounts focus on the effects of union density, collective bargaining centralization, and labour government. Analysis of time series from 18 countries for 1966 to 1992 yields some evidence for both theories between 1966 and 1974. Bayesian methods indicate a structural break in the wage growth process, linking the wage slowdown of the 1980s to the declining power of labour movements.

Manuscript received: July 1, 1998.


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