In an economy with large wage-setters (like industry unions), the monetary regime affects the trade-off between consumer real wages and employment and profits faced by the wage-setters. This paper shows that an exchange rate target, including participation in a monetary union, is likely to...

In most European countries, the prevailing terms of employment, including the nominal wage, can be changed only by mutual consent. This legal feature gives workers a strategic advantage in wage negotiations when employers push for a nominal wage cut. The upshot is a long-run trade-off between...

Empirical equations, based on a theoretical bargaining model, are estimated on data for wage drift in six industries and in the aggregate manufacturing sector in Norway. It is shown that the central wage settlement has a strong impact on aggregate and relative wages in the short run, and that...