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Paying more than necessary? The wage cushion in Germany

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  • Jung, Sven
  • Schnabel, Claus

Abstract

Using a representative establishment data set for Germany, we show that more than 40 percent of plants covered by collective agreements pay wages above the level stipulated in the agreement, which gives rise to a wage cushion between the levels of actual and contractual wages. Cross-sectional and fixed-effects estimations for the period 2001-2006 indicate that the wage cushion mainly varies with the profit situation of the plant and with indicators of labour shortage and the business cycle. While plants bound by multi-employer sectoral agreements seem to pay wage premiums in order to overcome the restrictions imposed by the rather centralized system of collective bargaining in Germany, plants which make use of single-employer agreements are significantly less likely to have wage cushions. -- Anhand von repräsentativen Daten des IAB-Betriebs-panels zeigen wir, dass über 40 Prozent der tarifgebundenen Betriebe in Deutschland höhere Löhne als im Tarifvertrag festgelegt zahlen, was zu einer Lohnspanne (bzw. einem Lohnpuffer) zwischen Effektiv- und Tariflöhnen führt. Querschnitts- und Fixe-Effekte-Schätzungen für den Zeitraum 2001-2006 deuten darauf hin, dass die übertarifliche Entlohnung hauptsächlich mit der Ertragslage des Betriebes und mit Indikatoren der Arbeitskräfteknappheit und des Konjunkturzyklus variiert. Während an Flächentarifverträge gebundene Betriebe über Tarif entlohnen dürften, um Beschränkungen zu überwinden, die ihnen durch das relativ zentrali-sierte Tarifverhandlungssystem in Deutschland auferlegt werden, weisen Betriebe mit Firmentarifverträgen wesentlich seltener eine übertarifliche Entlohnung auf.

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Bibliographic Info

Paper provided by Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics in its series Discussion Papers with number 63.

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Date of creation: 2009
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Handle: RePEc:zbw:faulre:63

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Web page: http://www.arbeitsmarkt.wiso.uni-erlangen.de/english-version/
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Keywords: wages; wage cushion; wage determination; bargaining; Germany;

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  1. Muysken, Joan & van Veen, Tom, 1996. " Efficiency Wages and Local Wage Bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(1), pages 119-27, March.
  2. Ordine, Patrizia, 1995. "Wage drift and minimum contractual wage: Theoretical interrelationship and empirical evidence for Italy," Labour Economics, Elsevier, vol. 2(4), pages 335-357, December.
  3. Paulo Bastos & Natália P. Monteiro & Odd Rune Straume, 2008. "Firm heterogeneity and wages in unionised labour markets: Theory and evidence," NIPE Working Papers 14/2008, NIPE - Universidade do Minho.
  4. Olaf H¸bler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, 09.
  5. Ana Rute Cardoso & Pedro Portugal, 2005. "Contractual Wages and the Wage Cushion under Different Bargaining Settings," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 875-902, October.
  6. 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.
  7. Schnabel, Claus & Zagelmeyer, Stefan & Kohaut, Susanne, 2005. "Collective bargaining structure and its determinants : an empirical analysis with British and German establishment data," IAB Discussion Paper 200516, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  8. Hibbs, Douglas Jr. & Locking, Hakan, 1996. "Wage compression, wage drift and wage inflation in Sweden," Labour Economics, Elsevier, vol. 3(2), pages 109-141, September.
  9. Addison, John T & Schnabel, Claus & Wagner, Joachim, 2001. "Work Councils in Germany: Their Effects on Establishment Performance," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 659-94, October.
  10. Kohaut, Susanne & Schnabel, Claus, 2003. "Verbreitung, Ausmaß und Determinanten der übertariflichen Entlohnung," Discussion Papers 23, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  11. F. W. Gould, 1967. "The Dynamics of Wage‐Drift," The Economic Record, The Economic Society of Australia, vol. 43(3), pages 371-394, 09.
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