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Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany

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Author Info
Fitzenberger, Bernd () (University of Freiburg)
Kohn, Karsten () (University of Frankfurt)
Lembcke, Alexander C. () (CEP, London School of Economics)

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Abstract

Collective bargaining in Germany takes place either at the industry level or at the firm level; collective bargaining coverage is much higher than union density; and not all employees in a covered firm are necessarily covered. This institutional setup suggests to explicitly distinguish union power as measured by net union density (NUD) in a labor market segment, coverage at the firm level, and coverage at the individual level. Using linked employer-employee data and applying quantile regressions, this is the first empirical paper which simultaneously analyzes these three dimensions of union influence on the structure of wages. Ceteris paribus, a higher share of employees in a firm covered by industry-wide or firm-level contracts is associated with higher wages. Yet, individual bargaining coverage in a covered firm shows a negative impact both on the wage level and on wage dispersion. A higher union density reinforces the effects of coverage, but the effect of union density is negative at all points in the wage distribution for uncovered employees. In line with an insurance motive, higher union density compresses the wage structure and, at the same time, it is associated with a uniform leftward movement of the distribution for uncovered employees.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3356.

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Date of creation: Feb 2008
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Handle: RePEc:iza:izadps:dp3356

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Related research
Keywords: linked employer-employee data; quantile regression; wage structure; collective bargaining coverage; union density; Structure of Earnings Survey 2001; Germany;

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Find related papers by JEL classification:
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
J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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  1. Michael C. Burda & Bernd Fitzenberger & Alexander Lembcke & Thorsten Vogel, 2008. "Unionization, Stochastic Dominance, and Compression of the Wage Distribution: Evidence from Germany," SFB 649 Discussion Papers SFB649DP2008-041, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  2. Teschner, Tatjana, 2009. "Der Einfluss der Tarifbindung auf Lohnhöhe und Lohnverteilung," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-431, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
  3. Boockmann, Bernhard & Steffes, Susanne, 2008. "Workers, Firms, or Institutions: What Determines Job Duration for Male Employees in Germany?," ZEW Discussion Papers 08-116, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  4. Genre, Véronique & Kohn, Karsten & Momferatou, Daphne, 2009. "Understanding Inter-Industry Wage Structures in the Euro Area," IZA Discussion Papers 4114, Institute for the Study of Labor (IZA). [Downloadable!]
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