Labor conflict and sectoral wage setting in Argentina

Abstract

We contribute to the analysis of the macroeconomic and labor market impact of labor conflict in two ways: we introduce a Labor Conflict Index (LCI), built at both the aggregate and the sectoral level, and estimate the effect of union bargaining power, as captured by the LCI, on real wage determination. We find that, in the short run, conflict pays off:Across sectors, a 1% increase in bargaining power, as measured by the LCI, leads to a 0.5% - 2% increase in the average real wage.