Successful Wage Concertation: The Economic Effects of Wage Pacts and Their Alternatives


  • Bernd Brandl is at the University of Vienna.


Recent debates on pacts have focused on the prerequisites for their emergence, whereas questions of their efficacy have receded into the background. In particular, systematic analyses of the effectiveness of pacts in terms of their capacity to enhance economic performance are missing. The aim of this article is therefore to assess the economic impact of pacts. As the majority of pacts concern wages, the assessment will concentrate on a comparison of the performance of pacts with alternative governance mechanisms for wage policies, that is, alternative pay-setting modes. The findings show that when wage pacts are endowed with the ability to govern lower-level pay determination, they are better at enhancing economic performance than other forms of coordination.