Bargaining (De)centralization, Macroeconomic Performance and Control over the Employment Relationship

Based on data for 20 OECD countries, this paper analyses the effect of bargaining centralization on performance and control over the employment relationship. Rejecting both the corporatist thesis and the hump-shape thesis, the paper finds that performance either increases or decreases with centralization, depending on the ability of the higher level to bind lower levels. There is a clear effect on control in that bargaining coverage significantly declines with decentralization. Employers can therefore expect to extend management prerogatives, rather than improve performance, when enforcing decentralization. Hence the literature on bargaining structures when focusing on performance has lost sight of their contested nature. Copyright Blackwell Publishing Ltd/London School of Economics 2003.