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

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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.

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  • 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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    Cited by:

    1. Fitzenberger, Bernd & Seidlitz, Arnim, 2020. "Die Lohnungleichheit von Vollzeitbeschäftigten in Deutschland : Rückblick und Überblick (Wage inequality among the full-time employed in Germany revisited : An overview)," IAB Discussion Paper 202019, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Mertens, Matthias, 2020. "Labour market power and between-firm wage (in)equality," IWH-CompNet Discussion Papers 1/2020, Halle Institute for Economic Research (IWH).
    3. Charlotte Bartels & Carsten Schroeder, 2020. "The role of rental income, real estate and rents for inequality in Germany," Working Papers 7, Forum New Economy.
    4. Charlotte Bartels & Carsten Schroeder, 2020. "Income, consumption and wealth inequality in Germany: Three concepts, three stories?," Basic Papers 2, Forum New Economy.
    5. Brall, Franziska & Schmid, Ramona, 2020. "Automation, robots and wage inequality in Germany: A decomposition analysis," Hohenheim Discussion Papers in Business, Economics and Social Sciences 14-2020, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    6. Seckler, Matthias, 2019. "Increasing inequality in lifetime earnings: A tale of educational upgrading and changing employment patterns," University of Tübingen Working Papers in Business and Economics 119, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    7. Michele Battisti & Gabriel Felbermayr & Sybille Lehwald, 2016. "Inequality in Germany: Myths, Facts, and Policy Implications," ifo Working Paper Series 217, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Giuseppe Berlingieri & Patrick Blanchenay & Chiara Criscuolo, 2017. "The Great Divergence(s)," CEP Discussion Papers dp1488, Centre for Economic Performance, LSE.
    9. Daniel Baumgarten & Sybille Lehwald, 2019. "Trade Exposure and the Decline in Collective Bargaining: Evidence from Germany," CESifo Working Paper Series 7754, CESifo.
    10. Martin Biewen & Matthias Seckler, 2019. "Unions, Internationalization, Tasks, Firms, and Worker Characteristics: A Detailed Decomposition Analysis of Rising Wage Inequality in Germany," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(4), pages 461-498, December.
    11. Bernd Fitzenberger & Arnim Seidlitz, 0. "Die Lohnungleichheit von Vollzeitbeschäftigten in Deutschland: Rückblick und Überblick
      [Wage inequality among the full-time employed in Germany revisited: An overview]
      ," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 0, pages 1-19.
    12. Bernd Fitzenberger & Arnim Seidlitz, 2020. "Die Lohnungleichheit von Vollzeitbeschäftigten in Deutschland: Rückblick und Überblick [Wage inequality among the full-time employed in Germany revisited: An overview]," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 14(2), pages 125-143, July.
    13. Mertens, Matthias, 2020. "Labour market power and between-firm wage (in)equality," IWH Discussion Papers 13/2020, Halle Institute for Economic Research (IWH).
    14. Biewen, Martin & Seckler, Matthias, 2017. "Changes in the German Wage Structure: Unions, Internationalization, Tasks, Firms, and Worker Characteristics," IZA Discussion Papers 10763, Institute of Labor Economics (IZA).

    More about this item

    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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