Abstract
The paper presents empirical results for wage setting in the Norwegian local and central public sector. Our results imply that central and local government wages are completely autonomous processes both in the short-run and in the long-run. This suggests that the formal strong coordination of wage setting in the two sectors at the national level does not determine the final outcome. We find that a stronger central government will reduce wages in the local government sector. The evidence also suggests an electoral cycle in the local--but not in the central government sector. Copyright 2001 by Blackwell Publishing Ltd
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