Wage Bargaining Institutions in Europe: a happy Marriage or preparing for Divorce?

This paper is written as a reappraisal of the work on inflation and wage bargaining of Ezio Tarantelli, the Italian economist who in 1985 was brutally killed by the Red Brigades. It returns to his ideas, and the discussion within the OECD, about combating inflation and free collective bargaining, as well as the relationship between corporatism and macroeconomic performance. After a critical review of Tarantelli’s contribution, the paper reviews five critical institutional characteristics of wage formation in fourteen European countries and evaluates changes that have happened between 1980 and 2003. The key question is whether there is a new institutional compromise in the field of collective bargaining over wages, mixing the advantages of coordination and decentralisation, and whether that "marriage of opposite’, as it was called by Tarantelli, can be stable or is foreboding a further disintegration of coordinating wage bargaining.