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The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?

Author

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  • Brändle, Tobias

    (Institut für Angewandte Wirtschaftsforschung (IAW))

  • Goerke, Laszlo

    (IAAEU, University of Trier)

Abstract

A large number of articles have analysed 'the one constant' in the economic effects of trade unions, namely that collective bargaining reduces employment growth by two to four percentage points per year. Evidence is, however, mostly related to Anglo-Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked-employer-employee data for Germany, we find a negative correlation between being covered by a sector-wide bargaining agreement or firm-level contract and employment growth of about one percentage point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross-section data might be driven by selection.

Suggested Citation

  • Brändle, Tobias & Goerke, Laszlo, 2018. "The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?," IZA Discussion Papers 11518, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11518
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    References listed on IDEAS

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    Cited by:

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    2. Bernardo Fanfani, 2019. "The Employment Effects of Collective Bargaining," Working papers 064, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    3. Andrea Garnero & François Rycx & Isabelle Terraz, 2020. "Productivity and Wage Effects of Firm‐Level Collective Agreements: Evidence from Belgian Linked Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 58(4), pages 936-972, December.
    4. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.
    5. Bernd Brandl, 2023. "Everything we do know (and don’t know) about collective bargaining: The Zeitgeist in the academic and political debate on the role and effects of collective bargaining," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 44(3), pages 660-678, August.
    6. Addison, John T. & Teixeira, Paulino & Grunau, Philipp & Bellmann, Lutz, 2019. "Dissonant Works Councils and Establishment Survivability," IZA Discussion Papers 12438, Institute of Labor Economics (IZA).
    7. Panu Poutvaara & Till Nikolka & Daniel Leithold & Katrin Oesingmann & Daniela Wech, 2017. "Comparative study about the powers and the representativeness of employee representatives in French and German enterprises," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 84.
    8. Mohrenweiser, Jens, 2022. "Works Councils," GLO Discussion Paper Series 1103, Global Labor Organization (GLO).
    9. Kraft, Kornelius & Lammers, Alexander, 2021. "The Effects of Reforming a Federal Employment Agency on Labor Demand," IZA Discussion Papers 14629, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    job flows; employment growth; collective bargaining; trade unions;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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