We investigate the effects of wage compression through centralized collective bargaining when growth depends on the continual reallocation of labor from older, less productive plants to new, more productive plants.

This paper was prepared for the Conference on Measures to Improve Wage Formation in Sweden, hosted by The Commission on the Strengthening of the Mediation Authority in Sweden; Stockholm 28 September 1998. The background for the conference was a series of concrete proposals made by employee and...