Belgium’s 2008 recentralization of wage-setting mechanisms and the decentralization-unit labor costs-net exports link: Chronicle of a Death Foretold?

Authors

Ines Pedro Fernandes, Harvard UniversityFollow

Abstract

Anchored on scholarly literature on international competitiveness and the classical definition of competitiveness as net exports, policy making institutions support decentralized wage-setting mechanisms. The rationale is that decentralized wage-setting systems lower wages and unit labor costs (ULC) and, therefore, increase net exports. This paper contains a literature review on the wage-setting–ULC–net exports link and challenges conventional rationales by examining the co-evolution of Belgium’s real wages and net exports across wage percentiles and sectors. Belgium is a case in point, since the country experienced both increasing real wages and increasing net exports after recentralizing wage-setting mechanisms in 2008.

Recommended Citation

Pedro Fernandes, Ines (2018) "Belgium’s 2008 recentralization of wage-setting mechanisms and the decentralization-unit labor costs-net exports link: Chronicle of a Death Foretold?," Undergraduate Economic Review: Vol. 15: Iss. 1, Article 13.
Available at: https://digitalcommons.iwu.edu/uer/vol15/iss1/13