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Collective bargaining coverage, works councils and the new German minimum wage

Author

Listed:
  • Lutz Bellmann

    (Institute for Employment Research (IAB), Germany; Friedrich-Alexander-University of Erlangen-Nuremberg, Germany)

  • Mario Bossler

    (Institute for Employment Research (IAB), Germany; Labour and Socio-Economic Research Centre Nuremberg (LASER), Germany)

  • Hans-Dieter Gerner

    (Nuremberg Institute of Technology Georg Simon Ohm, Germany; Institute for Employment Research (IAB), Germany)

  • Olaf Hübler

    (Leibniz University Hannover, Germany)

Abstract

This article assesses the role of the recent introduction of the minimum wage for collective bargaining coverage and works councils in Germany. The new minimum wage was initiated to strengthen German tariff autonomy, but effects on collective bargaining coverage are theoretically ambivalent. Using the IAB Establishment Panel, descriptive regressions show that firms covered by a collective bargaining contract are much less likely affected by the minimum wage. To construct a counterfactual for the group of affected establishments, the authors apply an entropy balancing procedure. Subsequent difference-in-differences estimates reveal a slight decline in collective bargaining participation, which falls short of statistical significance. Although the effect on opting into collective bargaining is even slightly positive, the authors observe a significant decrease in coverage through firms that exit collective agreements.

Suggested Citation

  • Lutz Bellmann & Mario Bossler & Hans-Dieter Gerner & Olaf Hübler, 2021. "Collective bargaining coverage, works councils and the new German minimum wage," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 42(2), pages 269-288, May.
    • Handle: RePEc:sae:ecoind:v:42:y:2021:i:2:p:269-288
    DOI: 10.1177/0143831X18762304
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