What a Difference Trade Makes - Export Activity and the Flexibility of Collective Bargaining Agreements
AbstractThe prevalence of opening clauses in collective bargaining agreements may indicate a tendency to a higher decentralised wage settlement. Increasing competition on international product markets is assumed to be one reason for wage-setting decentralisation, whereas theoretical explanations focus currently on the change of production structure and the impact of exogenous shocks. Incorporating stylised facts about exporting firms, new trade models suggest a different way of adjustment to increasing competition depending on a firm's nature. While the most productive exporters expand into new markets, small, less productive non-exporters are threatened by import competition. Based on the model from Bernard et al. (2003), we apply the theoretical implications to explain why decentralisation in bargaining may arise. We examine in a second step whether small, less productive, non-exporting firms paying low average wages, possess a higher propensity to use opening clauses than more productive, large exporters with a high wage level. Based on IAB Establishment Data covering the German Manufacturing, our results indicate that firms exporting to EMU countries -- but not exporters in general -- have a lower propensity of using opening clauses than non-exporters. However, inconsistent with theory, slight evidence suggests a rising propensity with increasing firm size and increasing wage level.
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Bibliographic InfoPaper provided by Department of Economics, University of Hohenheim, Germany in its series Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim with number 293/2007.
Length: 26 pages
Date of creation: Dec 2007
Date of revision:
Contact details of provider:
Postal: D-70593 Stuttgart
Web page: http://www.uni-hohenheim.de/institution/institut-fuer-economics-11
More information through EDIRC
trade model; opening clauses; collective bargaining;
Other versions of this item:
- Wolf Dieter Heinbach & Stefanie Schröpfer, 2007. "What a Difference Trade Makes - Export Activity and the Flexibility of Collective Bargaining Agreements," IAW Discussion Papers 35, Institut für Angewandte Wirtschaftsforschung (IAW).
- 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
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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.:
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- repec:iab:iabzaf:v:44:i:1/2:p:163-172 is not listed on IDEAS
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