IDEAS home Printed from https://ideas.repec.org/a/bla/scotjp/v65y2018i5p445-478.html
   My bibliography  Save this article

The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data

Author

Listed:
  • Tobias Brändle
  • Laszlo Goerke

Abstract

A large number of articles have analysed ‘the one constant’ in the economic effects of trade unions, namely that collective bargaining reduces employment growth by 2–4% points per year. Evidence is, however, mostly related to Anglo‐Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked‐employer‐employee data for Germany, we find a negative correlation between being covered by a sector‐wide bargaining agreement or firm‐level contract and employment growth of about 1% point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross‐section data might be driven by selection.

Suggested Citation

  • Tobias Brändle & Laszlo Goerke, 2018. "The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(5), pages 445-478, November.
  • Handle: RePEc:bla:scotjp:v:65:y:2018:i:5:p:445-478
    DOI: 10.1111/sjpe.12180
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/sjpe.12180
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. John T. Addison & Alex Bryson & Paulino Teixeira & André Pahnke, 2011. "Slip Sliding Away: Further Union Decline In Germany And Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(4), pages 490-518, September.
    2. Alex Bryson, 2004. "Unions And Employment Growth In British Workplaces During The 1990s: A Panel Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(4), pages 477-506, September.
    3. Addison, John T. & Teixeira, Paulino & Zwick, Thomas, 2006. "Works Councils and the Anatomy of Wages," IZA Discussion Papers 2474, Institute of Labor Economics (IZA).
    4. Martyn Andrews & Thorsten Schank & Richard Upward, 2006. "Practical fixed-effects estimation methods for the three-way error-components model," Stata Journal, StataCorp LP, vol. 6(4), pages 461-481, December.
    5. Bernd Fitzenberger & Karsten Kohn & Alexander C. Lembcke, 2013. "Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany," ILR Review, Cornell University, ILR School, vol. 66(1), pages 169-197, January.
    6. John T. Addison & Paulino Teixeira & Katalin Evers & Lutz Bellmann, 2017. "Contract Innovation in Germany: An Economic Evaluation of Pacts for Employment and Competitiveness," British Journal of Industrial Relations, London School of Economics, vol. 55(3), pages 500-526, September.
    7. Machin, Stephen J & Wadhwani, Sushil, 1991. "The Effects of Unions on Organisational Change and Employment," Economic Journal, Royal Economic Society, vol. 101(407), pages 835-854, July.
    8. Aaron J. Sojourner & Brigham R. Frandsen & Robert J. Town & David C. Grabowski & Min M. Chen, 2015. "Impacts of Unionization on Quality and Productivity," ILR Review, Cornell University, ILR School, vol. 68(4), pages 771-806, August.
    9. John T. Addison & Alex Bryson & Paulino Teixeira & André Pahnke & Lutz Bellmann, 2013. "The Extent of Collective Bargaining and Workplace Representation: Transitions between States and their Determinants. A Comparative Analysis of Germany and Great Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(2), pages 182-209, May.
    10. Addison, John T. & Belfield, Clive R., 2002. "Unions and Employment Growth: The One Constant?," IZA Discussion Papers 479, Institute of Labor Economics (IZA).
    11. David G. Blanchflower & Simon M. Burgess, 1996. "Job Creation and Job Destruction in Great Britain in the 1980s," ILR Review, Cornell University, ILR School, vol. 50(1), pages 17-38, October.
    12. Alex Bryson & Harald Dale-Olsen, 2008. "A Tale of Two Countries: Unions, Closures and Growth in Britain and Norway," CEP Discussion Papers dp0867, Centre for Economic Performance, LSE.
    13. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    14. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    15. Uwe Jirjahn, 2010. "Works councils and employment growth in German establishments," Cambridge Journal of Economics, Oxford University Press, vol. 34(3), pages 475-500.
    16. Martyn Andrews & Thorsten Schank & Richard Upward, 2006. "Practical fixed-effects estimation methods for the three-way error-components model," Stata Journal, StataCorp LP, vol. 6(4), pages 461-481, December.
    17. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
    18. Sven Jung & Claus Schnabel, 2011. "Paying More than Necessary? The Wage Cushion in Germany," LABOUR, CEIS, vol. 25(2), pages 182-197, June.
    19. David Blanchflower & Simon Burgess, 1998. "New Technology And Jobs: Comparative Evidence From A Two Country Study," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(2-4), pages 109-138.
    20. John T. Addison & Paulino Teixeira & Thomas Zwick, 2010. "German Works Councils and the Anatomy of Wages," ILR Review, Cornell University, ILR School, vol. 63(2), pages 247-270, January.
    21. Bernd Fitzenberger & Aderonke Osikominu & Robert Völter, 2006. "Imputation Rules to Improve the Education Variable in the IAB Employment Subsample," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 126(3), pages 405-436.
    22. Oberfichtner Michael & Schnabel Claus, 2019. "The German Model of Industrial Relations: (Where) Does It Still Exist?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(1), pages 5-37, January.
    23. Jörg Heining & Wolfram Klosterhuber & Stefan Seth, 2014. "An Overview on the Linked Employer-Employee Data of the Institute for Employment Research (IAB)," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 134(1), pages 141-148.
    24. Mario Bossler & Gregor Geis & Jens Stegmaier, 2018. "Comparing survey data with an official administrative population: assessing sample-selectivity in the IAB Establishment Panel," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(2), pages 899-920, March.
    25. Richard J. Long, 1993. "The Effect of Unionization on Employment Growth of Canadian Companies," ILR Review, Cornell University, ILR School, vol. 46(4), pages 691-703, July.
    26. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-188, Winter.
    27. N. Guertzgen, 2010. "Rent-sharing and collective wage contracts-evidence from German establishment-level data," Applied Economics, Taylor & Francis Journals, vol. 42(22), pages 2835-2854.
    28. Ellguth, Peter & Kohaut, Susanne, 2014. "Tarifbindung und betriebliche Interessenvertretung: Ergebnisse aus dem IAB-Betriebspanel 2013," WSI-Mitteilungen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 67(4), pages 286-295.
    29. John DiNardo & David S. Lee, 2004. "Economic Impacts of Unionization on Private Sector Employers: 1984-2001," NBER Working Papers 10598, National Bureau of Economic Research, Inc.
    30. John Addison & Stanley Siebert & Joachim Wagner & Xiangdong Wei, 2000. "Worker Participation and Firm Performance: Evidence from Germany and Britain," British Journal of Industrial Relations, London School of Economics, vol. 38(1), pages 7-48, March.
    31. Robert Krol & Shirley Svorny, 2007. "Unions and Employment Growth: Evidence from State Economic Recoveries," Journal of Labor Research, Springer, vol. 28(3), pages 525-535, July.
    32. Blanchflower, David G & Millward, Neil & Oswald, Andrew J, 1991. "Unionism and Employment Behaviour," Economic Journal, Royal Economic Society, vol. 101(407), pages 815-834, July.
    33. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    34. John T. Addison & Paulino Teixeira, 2005. "The Effect of Works Councils on Employment Change," GEMF Working Papers 2005-06, GEMF, Faculty of Economics, University of Coimbra.
    35. Macpherson, D.A. & Dunne, T., 1992. "Unionism and Gross Employment Flows," Working Papers 1992_10_5, Department of Economics, Florida State University.
    36. John DiNardo & David S. Lee, 2004. "Economic Impacts of New Unionization on Private Sector Employers: 1984–2001," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1383-1441.
    37. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    38. Booth, Alison L & McCulloch, Andrew, 1999. "Redundancy Pay, Unions and Employment," Manchester School, University of Manchester, vol. 67(3), pages 346-366, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Addison, John T. & Teixeira, Paulino & Grunau, Philipp & Bellmann, Lutz, 2019. "Dissonant Works Councils and Establishment Survivability," IZA Discussion Papers 12438, Institute of Labor Economics (IZA).
    2. Bernardo Fanfani, 2019. "The Employment Effects of Collective Bargaining," Working papers 064, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    3. Brändle, Tobias & Kalweit, René, 2016. "The Employment Effects of the EU Eastern Enlargement in Germany," Annual Conference 2016 (Augsburg): Demographic Change 145502, Verein für Socialpolitik / German Economic Association.

    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J - Labor and Demographic Economics
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:scotjp:v:65:y:2018:i:5:p:445-478. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://edirc.repec.org/data/sesssea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.