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Dissecting Between‐Plant and Within‐Plant Wage Dispersion: Evidence from Germany

Author

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  • Daniel Baumgarten
  • Gabriel Felbermayr
  • Sybille Lehwald

Abstract

Using rich linked employer–employee data for (West) Germany between 1996 and 2014, we conduct a decomposition analysis based on recentered influence function (RIF) regressions to analyze the relative contributions of various plant and worker characteristics to the rise in German wage dispersion. Moreover, we separately investigate the sources of between‐plant and within‐plant wage dispersion. We find that industry effects and the collective bargaining regime contribute the most to rising wage inequality. In the case of collective bargaining, both the decline in collective bargaining coverage and the increase in wage dispersion among the group of covered plants have played important roles.

Suggested Citation

  • Daniel Baumgarten & Gabriel Felbermayr & Sybille Lehwald, 2020. "Dissecting Between‐Plant and Within‐Plant Wage Dispersion: Evidence from Germany," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 85-122, January.
    • Handle: RePEc:bla:indres:v:59:y:2020:i:1:p:85-122
    DOI: 10.1111/irel.12249
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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