How Institutions and Business Strategies Affect Wages: A Cross-National Study of Call Centers

Abstract

This paper, drawing on a 2003-2006 establishment-level survey of 1,819 call centers in 15 countries, examines effects of industrial relations institutions and employer strategies on wage variation across coordinated, liberal, and emerging market economies. The authors find several contradictory patterns, which confirm theoretical predictions for some countries and contradict them for others, suggesting diverse institutional reactions to the emergence of a new economic activity. Consistent with prior research, Denmark, France, and Sweden exhibit patterns of low wage dispersion and no union wage premium, and the United States, Canada, and emerging market economies exhibit quite high levels of dispersion. Contrary to prior research, Austria and Germany resemble the United States in their levels of wage dispersion, while the United Kingdom resembles the coordinated market group. Finally, employer strategies of outsourcing and market segmentation explain within-country wage variation in most countries, suggesting considerable flexibility in wage setting at the establishment level.