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Central wage bargaining and local wage flexibility: evidence from the entire wage distribution

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  • Büttner, Thiess
  • Fitzenberger, Bernd

Abstract

We argue that in labor markets with central wage bargaining wage flexibility varies systematically across the wage distribution: local wage flexibility is more relevant for the upper part of the wage distribution, and flexibility of wages negotiated under central wage bargaining affects the lower part of the wage distribution. Using a random sample of German social{security accounts, we estimate wage flexibility across the wage distribution by means of quantile regressions. The results support our hypothesis, as employees with low wages have significantly lower local wage flexibility than high wage employees. This effect is particularly relevant for the lower educational groups. On the other hand, employees with low wages tend to have a higher wage flexibility with respect to national unemployment. --

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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 98-39.

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Date of creation: 1998
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Handle: RePEc:zbw:zewdip:5210

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Keywords: Central wage bargaining; Wage flexibility; Quantile regression;

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