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Wage Cyclicality under Different Regimes of Industrial Relations

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Author Info

  • Gartner, Hermann

    ()
    (Institute for Employment Research (IAB), Nuremberg)

  • Schank, Thorsten

    ()
    (University of Mainz)

  • Schnabel, Claus

    ()
    (University of Erlangen-Nuremberg)

Abstract

Since there is scant evidence on the role of industrial relations in wage cyclicality, this paper analyzes the effect of collective wage contracts and of works councils on real wage growth. Using linked employer-employee data for western Germany, we find that works councils affect wage growth only in combination with collective bargaining. Wage adjustments to positive and negative economic shocks are not always symmetric. Only under sectoral bargaining there is a (nearly symmetric) reaction to rising and falling unemployment. In contrast, wage growth in establishments without collective bargaining adjusts only to falling unemployment and is unaffected by rising unemployment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5228.

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Length: 28 pages
Date of creation: Oct 2010
Date of revision:
Publication status: published in: Industrial Relations, 2013, 52 (2), 516-540
Handle: RePEc:iza:izadps:dp5228

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Keywords: wage cyclicality; wage bargaining; works council; Germany;

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Cited by:
  1. Gartner, Hermann & Brenzel, Hanna & Schnabel, Claus, 2013. "Wage posting or wage bargaining? Evidence from the employers side," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79907, Verein für Socialpolitik / German Economic Association.
  2. Addison, John T. & Teixeira, Paulino & Evers, Katalin & Bellmann, Lutz, 2013. "Indicative and Updated Estimates of the Collective Bargaining Premium in Germany," IZA Discussion Papers 7474, Institute for the Study of Labor (IZA).
  3. Schnitzlein, Daniel D., 2012. "How important is cultural background for the level of intergenerational mobility?," Economics Letters, Elsevier, vol. 114(3), pages 335-337.
  4. Hirsch, Boris & Zwick, Thomas, 2013. "How selective are real wage cuts? A micro-analysis using linked employer-employee data," Discussion Papers 88, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  5. Uwe Jirjahn, 2013. "Der Beitrag der Arbeitsmarktökonomik zur Erforschung von Gewerkschaften und Tarifvertragsbeziehungen in Deutschland," Research Papers in Economics 2013-03, University of Trier, Department of Economics.
  6. John T. Addison & Paulino Teixeira & Katalin Evers & Lutz Bellmann, 2013. "Collective Bargaining and Innovation in Germany: Cooperative Industrial Relations?," GEMF Working Papers 2014-01, GEMF - Faculdade de Economia, Universidade de Coimbra.

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