Firm Heterogeneity and Wages under Different Bargaining Regimes: Does a Centralised Union Care for Low-Productivity Firms?
AbstractThis paper studies the relationship between wages and the degree of firm heterogeneity in a given industry under different wage setting structures. To derive testable hypotheses, we set up a theoretical model that analyses the sensitivity of wages to the variability in productivity conditions in a unionised oligopoly framework. The model distinguishes centralised and decentralised wage determination. The theoretical results predict wages to be negatively associated with the degree of firm heterogeneity under centralised wage-setting, as unions internalise negative externalities of a wage increase for low-productivity firms.We test this prediction using a linked employer-employee panel data set from the German mining and manufacturing sector. Consistent with our hypotheses, the empirical results suggest that under industry-level bargaining workers in more heterogeneous sectors receive lower wages than workers in more homogeneous sectors. In contrast, the degree of firm heterogeneity is found to have no negative impact on wages in uncovered firms and under firm-level contracts.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.
Volume (Year): 229 (2009)
Issue (Month): 2-3 (June)
Contact details of provider:
Postal: Licher Straße 74, 35394 Gießen
Phone: +49 (0)641 99 22 001
Fax: +49 (0)641 99 22 009
Web page: http://wiwi.uni-giessen.de/home/oekonometrie/Jahrbuecher/
More information through EDIRC
Wage-setting structure; unions; oligopoly; linked employer-employee data;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gesine Stephan & Knut Gerlach, 2005. "Wage settlements and wage setting: results from a multi-level model," Applied Economics, Taylor & Francis Journals, vol. 37(20), pages 2297-2306.
- Justus Haucap & Christian Wey, 2004.
"Unionisation Structures and Innovation Incentives,"
Discussion Papers of DIW Berlin
398, DIW Berlin, German Institute for Economic Research.
- Bernd Fitzenberger & Karsten Kohn & Alexander C. Lembcke, 2013.
"Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 66(1), pages 169-197, January.
- Fitzenberger, Bernd & Kohn, Karsten & Lembcke, Alexander C., 2008. "Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany," IZA Discussion Papers 3356, Institute for the Study of Labor (IZA).
- Lembcke, Alexander C. & Kohn, Karsten & Fitzenberger, Bernd, 2008. "Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany," ZEW Discussion Papers 08-012, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Bernd Fitzenberger & Karsten Kohn & Alexander C. Lembcke, 2008. "Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany," CEP Discussion Papers dp0859, Centre for Economic Performance, LSE.
- Bernd Fitzenberger & Karsten Kohn & Alexander Lembcke, 2008. "Union density and varieties of coverage: the anatomy of union wage effects in Germany," LSE Research Online Documents on Economics 19622, London School of Economics and Political Science, LSE Library.
- Dowrick, Steve, 1989. "Union-Oligopoly Bargaining," Economic Journal, Royal Economic Society, vol. 99(398), pages 1123-42, December.
- Wolfgang Franz & Friedhelm Pfeiffer, 2003. "Zur ökonomischen Rationalität von Lohnrigiditäten aus der Sicht von Unternehmen," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 223(1), pages 23-57.
- Moene, K.O. & Wallerstein, M. & Hoel, M., 1992. "Bargaining Structure and Economic Performance," Memorandum 10/1992, Oslo University, Department of Economics.
- Alda, Holger & Bender, Stefan & Gartner, Hermann, 2005. "The linked employer-employee dataset of the IAB (LIAB)," IAB Discussion Paper 200506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Olaf H¸bler & Uwe Jirjahn, 2003.
"Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages,"
Scottish Journal of Political Economy,
Scottish Economic Society, vol. 50(4), pages 471-491, 09.
- Hübler, Olaf & Jirjahn, Uwe, 2001. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," IZA Discussion Papers 322, Institute for the Study of Labor (IZA).
- Barth, Erling & Zweimuller, Josef, 1995. " Relative Wages under Decentralized and Corporatist Bargaining Systems," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(3), pages 369-84, September.
- Corneo, Giacomo, 1995. "National wage bargaining in an internationally integrated product market," European Journal of Political Economy, Elsevier, vol. 11(3), pages 503-520, September.
- Karsten Kohn & Alexander Lembcke, 2007. "Wage distributions by bargaining regime," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 1(3), pages 247-261, December.
- Hoel, Michael, 1991. "Union Wage Policy: The Importance of Labour Mobility and the Degree of Centralization," Economica, London School of Economics and Political Science, vol. 58(230), pages 139-53, May.
- Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Winker).
If references are entirely missing, you can add them using this form.