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Abstract
This thesis consists of four papers on wage formation in Sweden. In the first paper two models of wage and employment determination are estimated using data from the Swedish Construction sector: the efficient bargaining model and the monopoly union model. The main objective of the paper is to examine whether the models provide a theory consistent description of firm technology and union utility. The results lead to the conclusion that the monopoly union model describes a well defined firm technology and union objective function. The estimates of the efficient bargaining model imply that we will end up at the only attainable solution on the labour demand curve, although this point seems to be a less accurate description of the data compared to the estimated monopoly model. In the second paper a general sequential bargaining model is estimated in order to test its special cases. In particular, the labour demand model and the model of efficient bargaining can be tested against the general model by the use of a likelihood ratio test. The main conclusion is that the labour demand model cannot be rejected, while the efficient bargaining model can be rejected in out of two cases.
The effects of labour market education on wages and employment are studied in the third paper. A monopoly union model on structural form is used to infer the effects of two hypotheses regarding labour market education. The first is an incentive effect on the part of workers and the second is a quality enhancing effect. Using data from the Swedish Pulp industry, we find that the incentive effect decreases the reservation utility of workers. There is also some support for the hypothesis that labour market education increases the quality of workers.
The final paper in the thesis estimates a monopoly union model with insiders. The basic model is augmented with a membership rule that nests a number of possible definitions of the incumbent labour force. The model is estimated with sectorial data from the Swedish economy. Hysteresis cannot be rejected. Using the membership rule as a testing device, we are able to reject membership hysteresis in five out of seven cases. Finally, a simultaneous equations model is estimated using data from the Construction sector and the Pulp industry of the Swedish economy. An insider hypothesis cannot be rejected in the case of the Pulp industry.