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We Want Them All Covered! Collective Bargaining and Firm Heterogeneity: Theory and Evidence from Germany

Author

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  • Florian Baumann
  • Tobias Brändle

Abstract

This paper establishes a link between the extent of collective bargaining and the degree of productivity dispersion within an industry. In a unionised oligopoly model we show that for only small di erences in productivity levels. a sector-union can design a collective wage contract that covers a wide range of heterogeneous firms. In sectors with higher productivity dispersion, an industry union has an incentive to demand firm-level wage contracts with the most productive firms, so that they can prevent low-productivity firms from leaving collective coverage. However, such firm-level contracts may not prevent firms at the lower end of the productivity distribution from avoiding collective coverage in sectors with high productivity dispersion. We test the predictions of the model using German linked employer-employee data between 1996 and 2010 and find support for our theoretical results.
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Suggested Citation

  • Florian Baumann & Tobias Brändle, 2017. "We Want Them All Covered! Collective Bargaining and Firm Heterogeneity: Theory and Evidence from Germany," British Journal of Industrial Relations, London School of Economics, vol. 55(3), pages 463-499, September.
    • Handle: RePEc:bla:brjirl:v:55:y:2017:i:3:p:463-499
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    File URL: http://hdl.handle.net/10.1111/bjir.2017.55.issue-3
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    Cited by:

    1. Daniel Baumgarten & Sybille Lehwald, 2019. "Trade Exposure and the Decline in Collective Bargaining: Evidence from Germany," CESifo Working Paper Series 7754, CESifo.
    2. de Pinto, Marco & Lingens, Jörg, 2019. "The impact of unionization costs when firm-selection matters," Labour Economics, Elsevier, vol. 60(C), pages 50-63.
    3. Fanfani, Bernardo, 2023. "The employment effects of collective wage bargaining," Journal of Public Economics, Elsevier, vol. 227(C).
    4. de Pinto, Marco & Michaelis, Jochen, 2019. "The labor market effects of trade union heterogeneity," Economic Modelling, Elsevier, vol. 78(C), pages 60-72.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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