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No extension without representation? Evidence from a natural experiment in collective bargaining

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  • Hijzen Alexander

    (OECD and IZA, London, England)

  • Martins Pedro S.

    (Queen Mary University of London and IZA, London, England)

Abstract

In many countries, collective bargaining coverage is enhanced by government-issued extensions that widen the reach of collective agreements beyond their signatory parties to all firms and workers in the sector. This paper analyzes the causal impact of extensions using a natural experiment in Portugal that resulted in a sharp and unanticipated decline in the extension probability of agreements. Our results, based on a regression discontinuity design, indicate that extensions had a negative impact on employment growth. This effect is concentrated among nonaffiliated firms, which may reflect the limited representativeness of employer associations.

Suggested Citation

  • Hijzen Alexander & Martins Pedro S., 2020. "No extension without representation? Evidence from a natural experiment in collective bargaining," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-31, March.
    • Handle: RePEc:vrs:izajle:v:9:y:2020:i:1:p:31:n:8
    DOI: 10.2478/izajole-2020-0005
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    More about this item

    Keywords

    industrial relations; employer associations; wage setting; employment;
    All these keywords.

    JEL classification:

    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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