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Have Employees In Germany Received Full Wage Compensation After A Cut In Standard Hours?

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  • THORSTEN SCHANK

Abstract

The effect of standard hours on the hourly wage rate is important in assessing whether work‐sharing is likely to be a successful policy. Furthermore, it determines whether unions have achieved their goal of keeping the monthly income of employees constant after a cut in standard hours (income compensation) or whether employees experience reductions in monthly income (income sharing). However, the standard hours elasticity of the hourly wage rate has rarely been estimated. This study reports evidence for Germany, 1995–99, using the IAB Establishment Panel. The results imply income compensation for plants with a bargaining agreement, but income sharing for plants without a bargaining agreement. No evidence is found for the Calmfors and Driffill hypothesis that postulates that wage demands are more moderate if unions operate at the firm level than if bargaining takes place at the industry level.

Suggested Citation

  • Thorsten Schank, 2006. "Have Employees In Germany Received Full Wage Compensation After A Cut In Standard Hours?," Manchester School, University of Manchester, vol. 74(3), pages 273-293, June.
    • Handle: RePEc:bla:manchs:v:74:y:2006:i:3:p:273-293
    DOI: 10.1111/j.1467-9957.2006.00493.x
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    References listed on IDEAS

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    1. Steiner, Viktor & Peters, Ralf-Henning, 2000. "Employment effects of work sharing: an econometric analysis for West Germany," ZEW Discussion Papers 00-20, ZEW - Leibniz Centre for European Economic Research.
    2. Udo Brixy & Susanne Kohaut & Claus Schnabel, 2007. "Do Newly Founded Firms Pay Lower Wages? First Evidence from Germany," Small Business Economics, Springer, vol. 29(1), pages 161-171, June.
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    Cited by:

    1. Arvind Ashta, 2017. "Work-sharing from Different Angles: A literature review," Working Papers CEB 17-033, ULB -- Universite Libre de Bruxelles.
    2. repec:clr:wugarc:y:2016v:42i:04p:665 is not listed on IDEAS
    3. Philipp Poyntner, 2016. "Beschäftigungseffekte von Arbeitszeitverkürzung," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 42(4), pages 665-684.
    4. Martyn Andrews & Hans-Dieter Gerner & Thorsten Schank & Richard Upward, 2015. "More hours, more jobs? The employment effects of longer working hours," Oxford Economic Papers, Oxford University Press, vol. 67(2), pages 245-268.

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