Corporatism and capital accumulation : the fate of the social corporatist model

An extensive literature has examined whether corporatist national wage bargaining systems can deliver superior economic performance, but this has mostly focused on short run indicators. Such systems of industrial relations could provide incentives for investment if organized labour can credibly pre-commit to wage moderation. This paper examines this, building on monopoly union models that indicate the response of corporatist wage bargaining arrangements to investment. The paper estimates the response of wage bargaining to capital investment, conditional on outside options, in six key economies widely characterized as having sustained corporatist bargaining arrangements over 1970-2017. The econometric approach allows changes in regimes to be determined endogenously; these shifts appear consistent with wider evidence on changes in bargaining arrangements and financial integration of these economies.