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Can German Unions Still Cut It?

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Author Info

  • John Addison

    ()
    (University of South Carolina, GEMF and IZA Bonn)

  • Paulino Teixeira

    ()
    (University of Coimbra/GEMF and IZA Bonn)

  • Jens Stephani

    (Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit)

  • Lutz Bellmann

    (Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Arbeitsmarkt- und Berufsforschung, Bundesagentur für Arbeit, and IZA Bonn)

Abstract

Using linked employer-employee data, this paper estimates the effect of collective bargaining coverage on wages over an interval of continuing decline in unionism. Unobserved firm and worker heterogeneity is dealt with using two establishment sub-samples, comprising collective bargaining joiners and never members on the one hand and collective bargaining leavers and always members on the other, each in combination with subsets of worker job stayers. The counterfactuals are then reversed for robustness checks. Joining a sectoral agreement is found always to produce higher wages, while leaving one no longer produces wage losses if the transition is to a firm agreement. Leaving a firm agreement to non- coverage also leads to wage reductions, while joining one from non-coverage seems decreasingly favorable. The reverse counterfactuals yield correspondingly smaller estimates (in absolute value) of wage development than reported for the initial counterfactuals. Finally, although small, the union wage gap persists.

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File URL: http://gemf.fe.uc.pt/workingpapers/pdf/2012/gemf_2012-19_v2.pdf
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Bibliographic Info

Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2012-19.

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Length: 42 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:gmf:wpaper:2012-19

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Related research

Keywords: Germany; sectoral collective bargaining; firm-level agreements; wages; spell fixed-effects.;

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References

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  1. Haipeter, Thomas & Lehndorff, Steffen, 2009. "Collective bargaining on employment," ILO Working Papers 433128, International Labour Organization.
  2. John T. Addison & Claus Schnabel & Joachim Wagner, 2006. "The (Parlous) State of German Unions," Working Paper Series in Economics 23, University of Lüneburg, Institute of Economics.
  3. Hirsch, Boris & Schnabel, Claus, 2011. "Let's take bargaining models seriously: The decline in union power in Germany, 1992 - 2009," IWQW Discussion Paper Series 10/2011, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  4. Wolf Dieter Heinbach & Markus Spindler, 2007. "To Bind or Not to Bind Collectively? Decomposition of Bargained Wage Differences Using Counterfactual Distributions," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 294/2007, Department of Economics, University of Hohenheim, Germany.
  5. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  6. 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.
  7. Jung, Sven & Schnabel, Claus, 2009. "Paying More than Necessary? The Wage Cushion in Germany," IZA Discussion Papers 4278, Institute for the Study of Labor (IZA).
  8. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising wage inequality, the decline of collective bargaining, and the gender wage gap," ZEW Discussion Papers 10-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 843-881, May.
  10. John Addison & Paulino Teixeira & Katalin Evers & Lutz Bellmann, 2012. "Is the Erosion Thesis Overblown? Evidence from the Orientation of Uncovered Employers," GEMF Working Papers 2012-07, GEMF - Faculdade de Economia, Universidade de Coimbra.
  11. John T. Addison & Alex Bryson & Paulino Teixeira & André Pahnke & Lutz Bellmann, 2011. "The State of Collective Bargaining and Worker Representation in Germany: The Erosion Continues," GEMF Working Papers 2011-09, GEMF - Faculdade de Economia, Universidade de Coimbra.
  12. Wolf Heinbach, 2007. "Wages in wage-setting regimes with opening clauses," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 1(3), pages 233-245, December.
  13. Fitzenberger, Bernd & Kohn, Karsten, 2006. "Gleicher Lohn für gleiche Arbeit? Zum Zusammenhang zwischen Gewerkschaftsmitgliedschaft und Lohnstruktur in Westdeutschland 1985?1997," ZEW Discussion Papers 06-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  14. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
  15. 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.
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