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Firm-Level Contracting and the Structure of Wages in Spain

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  • David Card
  • Sara De La Rica

Abstract

In many European countries, sectoral bargaining agreements are automatically extended to cover all firms in an industry. Employers and employees can also negotiate firm-specific contracts. The authors of this paper use a large matched employer-employee data set from a 1995 survey in Spain to study the effects of firm-level contracting on the structure of wages. They estimate a series of wage determination models, including specifications that control for individual characteristics, coworker characteristics, the bargaining status of the workplace, and the probability that the workplace was covered by a firm-level contract. They find that firm-level contracting was associated with a 5–10% wage premium, with larger premiums for more highly paid workers. Although they cannot decisively test between alternative explanations for the firm-level contracting premium, they find that workers with firm-specific contracts had substantially longer job tenure than other workers, suggesting that the premium was at least partially a non-competitive phenomenon.

Suggested Citation

  • David Card & Sara De La Rica, 2006. "Firm-Level Contracting and the Structure of Wages in Spain," ILR Review, Cornell University, ILR School, vol. 59(4), pages 573-592, July.
  • Handle: RePEc:sae:ilrrev:v:59:y:2006:i:4:p:573-592
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    Cited by:

    1. W. Craig Riddell & Xueda Song, 2017. "The Role of Education in Technology Use and Adoption: Evidence from the Canadian Workplace and Employee Survey," ILR Review, Cornell University, ILR School, vol. 70(5), pages 1219-1253, October.
    2. Nicole Gürtzgen, 2006. "The Effect of Firm- ans Industry-Level Contracts on Wages: Evidence from Longitudinal Linked Employer-Employee Data," ZEW Discussion Papers 06-082, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Magda, Iga & Marsden, David & Moriconi, Simone, 2016. "Lower coverage but stronger unions? Institutional changes and union wage premia in Central Europe," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 638-656.
    4. Devicienti, Francesco & Manello, Alessandro & Vannoni, Davide, 2017. "Technical efficiency, unions and decentralized labor contracts," European Journal of Operational Research, Elsevier, vol. 260(3), pages 1129-1141.
    5. Du Caju, Philip & Fuss, Catherine & Wintr, Ladislav, 2009. "Understanding sectoral differences in downward real wage rigidity: workforce composition, institutions, technology and competition," Working Paper Series 1006, European Central Bank.
    6. McGuinness, Seamus & Kelly, Elish & O'Connell, Philip J., 2008. "The Impact of Wage Bargaining Regime on Firm-Level Competitiveness and Wage Inequality: The Case of Ireland," Papers WP266, Economic and Social Research Institute (ESRI).
    7. Juan Carluccio & Denis Fougère & Erwan Gautier, 2015. "Trade, Wages and Collective Bargaining: Evidence from France," Economic Journal, Royal Economic Society, vol. 0(584), pages 803-837, May.
    8. E. Gautier & D. Fougère & S. Roux, 2016. "The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France," Working papers 587, Banque de France.
    9. John T. Addison & Paulino Teixeira & Thomas Zwick, 2009. "Rent Seeking at Plant Level: An Application of the Card and de la Rica Tenure Test to German Works Councils," Economics Working Papers 09-04, Queen's Management School, Queen's University Belfast.
    10. De la Rica Goiricelaya, Sara & González de San Román Rosado, Ainara, 2007. "The Impact of Firm Level Contracting on Wage Levels and Inequality: Spain 1995-2002," DFAEII Working Papers 2007-07, University of the Basque Country - Department of Foundations of Economic Analysis II.
    11. Nicole Gürtzgen, 2016. "Estimating the Wage Premium of Collective Wage Contracts: Evidence from Longitudinal Linked Employer–Employee Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 294-322, April.
    12. repec:eee:touman:v:52:y:2016:i:c:p:96-109 is not listed on IDEAS
    13. Christian M. Dahl & Daniel le Maire & Jakob R. Munch, 2013. "Wage Dispersion and Decentralization of Wage Bargaining," Journal of Labor Economics, University of Chicago Press, vol. 31(3), pages 501-533.
    14. Giannakopoulos, Nicholas & Laliotis, Ioannis, 2017. "Decentralized Bargaining and the Greek Labour Relations Reform (Law 4024/2011)," MPRA Paper 76513, University Library of Munich, Germany.
    15. Nicole Guertzgen, 2009. "Rent-sharing and Collective Bargaining Coverage: Evidence from Linked Employer-Employee Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 323-349, June.
    16. Seamus McGuinness & Delma Byrne, 2015. "Born abroad and educated here: examining the impacts of education and skill mismatch among immigrant graduates in Europe," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-30, December.
    17. Murillo Huertas, Inés P. & Ramos, Raul & Simón, Hipólito, 2017. "Revisiting Interregional Wage Differentials: New Evidence from Spain with Matched Employer-Employee Data," IZA Discussion Papers 11122, Institute for the Study of Labor (IZA).
    18. repec:spr:soinre:v:134:y:2017:i:2:d:10.1007_s11205-016-1447-6 is not listed on IDEAS

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