The process of wage adjustment: An analysis using establishment-level data

Abstract

This article uses data from Spanish manufacturing plants to analyze the determinants of the importance attributed to several criteria when wages are adjusted. More specifically, the criteria taken into account in the study are the cost of living, the wages of the firm in relation to its competitors, the fulfillment of collective agreements at sector level, the need to recruit and retain employees, the performance of the organization, and the industrial relations climate. The results show that the structural characteristics of the establishment, some human resource management practices, as well as the wage-setting arrangements and the influence of trade unions, play a role in explaining wage adjustments.