The Influence of Labour Flows on Wage Drift: an Empirical Analysis for the Netherlands

Abstract

The wage level in The Netherlands is, by a large part, determined in collective labour agreements. However, the result of the processes of job destruction, job creation and job-to-job mobility is that workers move from less productive to more productive jobs. Our empirical analysis shows that the resulting productivity gains are reflected in the wage drift. i.e. wage increases which are not part of the collective agreements. Yet, the size of the effects appears to be rather modest.Wage formation; Wage drift; Labour flows