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Rent-sharing : Does the Bargaining Regime Make a Difference? Theory and Empirical Evidence

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  • Gürtzgen, Nicole
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    Abstract

    This paper analyses whether wages in Germany respond to firm-specific profitability conditions. Particular emphasis lies on the question of whether the extent of rent-sharing varies across different systems of wage determination. Those may be categorised into sector-specific wage agreements, firm-specific wage agreements and wage determination without any bargaining coverage. To derive testable hypotheses, we set up a theoretical model that analyses the sensitivity of wages to firm-specific conditions under different wage setting structures. The hypotheses are tested using an establishment-level panel data set from the mining and manufacturing sector. The results of the empirical analysis generally suggest that rent-sharing is present in Germany. However, the extent of rent-sharing is found to be significantly lower in establishments that are subject to a collective wage agreement - irrespective of whether the agreement is industry- or firm-specific. While pooled OLS estimates yield positive estimates of the rent-sharing coefficient in establishments that are covered by a collective contract, SYS-GMM-estimates accounting for unobserved heterogeneity and endogeneity of rents point to a rent-sharing coefficient of zero. --

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    Bibliographic Info

    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 05-15.

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    Date of creation: 2005
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    Handle: RePEc:zbw:zewdip:2905

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    Related research

    Keywords: Rent-Sharing; Wage-Setting Structure; Unions; Panel Data;

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    25. repec:fth:inseep:2001-16 is not listed on IDEAS
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    Cited by:
    1. Karsten Kohn & Alexander Lembcke, 2007. "Wage distributions by bargaining regime: linked employer-employee data evidence from Germany," LSE Research Online Documents on Economics 19699, London School of Economics and Political Science, LSE Library.
    2. Kuckulenz, Anja, 2006. "Wage and Productivity Effect of Continuing Training in Germany: A Sectoral Analysis," ZEW Discussion Papers 06-25, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Philip Du Caju & François Rycx & Ilan Tojerow, 2008. "Rent-sharing and the cyclicality of wage differentials," DULBEA Working Papers 08-23.RS, ULB -- Universite Libre de Bruxelles.
    4. Robert Plasman & François Rycx & Ilan Tojerow, 2006. "Industry wage differentials, unobserved ability, and rent-sharing: evidence from matched employer-employee, 1992-2005," DULBEA Working Papers 06-14.RS, ULB -- Universite Libre de Bruxelles.
    5. Anja Kuckulenz, 2006. "Wage and Productivity Effect of Continuing Training in Germany : A Sectoral Analysis," Working Papers of the Research Group Heterogenous Labor 06-06, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
    6. 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.

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