Instability and Change in Collective Bargaining: An Analysis of the Effects of Changing Institutional Structures

Previous studies on collective bargaining structures and macroeconomic performance have largely ignored the role of stable and instable institutional structures and the effects of institutional change itself. In this article we posit that institutional stability of collective bargaining is of major importance for the moderation of unit labour costs growth. This hypothesis is tested on the basis of data which cover the period 1965–2012 and includes 28 countries. The results show that institutional change impairs the capacity to moderate unit labour cost growth significantly in the subsequent years following the change. This effect also holds for changes in both decentralization and centralization of institutions.