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Firms' Rents, Workers' Bargaining Power and the Union Wage Premium

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  • Thomas Breda

Abstract

This article identifies the wage premium associated with firm-level union recognition in France. An average premium of 2% is found despite the fact that most workers are already covered by industry-level agreements. To explore the origin of the premium, I construct a simple bargaining model from which I derive three predictions, which are tested empirically using matched employer–employee data. The main prediction is that if intra-firm bargaining is behind the union wage premium, the latter increases with the amount of quasi-rents available in the firms that unions organise. This prediction is validated empirically when firms' market shares are used as a proxy for their rents.
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  • Thomas Breda, 2015. "Firms' Rents, Workers' Bargaining Power and the Union Wage Premium," Economic Journal, Royal Economic Society, vol. 125(589), pages 1616-1652, December.
    • Handle: RePEc:wly:econjl:v:125:y:2015:i:589:p:1616-1652
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    File URL: http://hdl.handle.net/10.1111/ecoj.2015.125.issue-589
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    Cited by:

    1. Dale-Olsen, Harald, 2019. "Creative Destruction, Social Security Uptake and Union Networks," IZA Discussion Papers 12546, Institute of Labor Economics (IZA).
    2. Adrian Chadi & Laszlo Goerke, 2023. "Seeking shelter in times of crisis? unemployment, perceived job insecurity and trade union membership," Economica, London School of Economics and Political Science, vol. 90(359), pages 1041-1088, July.
    3. Alessia Matano & Paolo Naticchioni, 2017. "The Extent of Rent Sharing along the Wage Distribution," British Journal of Industrial Relations, London School of Economics, vol. 55(4), pages 751-777, December.
    4. Paul Brandily & Camille Hémet & Clément Malgouyres, 2022. "Understanding the Reallocation of Displaced Workers to Firms," PSE Working Papers halshs-03082302, HAL.
    5. Askenazy, Philippe & Breda, Thomas, 2020. "Electoral Democracy at Work," IZA Discussion Papers 13226, Institute of Labor Economics (IZA).
    6. Samuel Dodini & Kjell Salvanes & Alexander L.P. Willén & Kjell G. Salvanes, 2021. "The Dynamics of Power in Labor Markets: Monopolistic Unions versus Monopsonistic Employers," CESifo Working Paper Series 9495, CESifo.
    7. de Pinto, Marco & Lingens, Jörg, 2019. "The impact of unionization costs when firm-selection matters," Labour Economics, Elsevier, vol. 60(C), pages 50-63.
    8. Thang Ngoc Bach & Canh Quang Le & Thang Van Nguyen, 2021. "Rent Sharing, Investment, and Collective Bargaining: Evidence from Employee‐Level Data in Vietnam," The Developing Economies, Institute of Developing Economies, vol. 59(1), pages 3-38, March.
    9. Marco de Pinto & Jochen Michaelis, 2017. "Firm Selection and the Role of Union Heterogeneity," MAGKS Papers on Economics 201743, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    10. Lingens, Jörg & De Pinto, Marco & Bauer, Christian, 2016. "The Impact of Organization Costs when Firm-selection Matters," VfS Annual Conference 2016 (Augsburg): Demographic Change 145620, Verein für Socialpolitik / German Economic Association.
    11. Breda, Thomas & Haywood, Luke & Wang, Haomin, 2022. "Equilibrium Effects of Payroll Tax Reductions and Optimal Policy Design," IZA Discussion Papers 15810, Institute of Labor Economics (IZA).
    12. Andrea Garnero & François Rycx & Isabelle Terraz, 2020. "Productivity and Wage Effects of Firm‐Level Collective Agreements: Evidence from Belgian Linked Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 58(4), pages 936-972, December.
    13. Pedro Silva Martins, 2019. "The Microeconomic Impacts of Employee Representatives: Evidence from Membership Thresholds," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 58(4), pages 591-622, October.
    14. de Pinto, Marco & Michaelis, Jochen, 2019. "The labor market effects of trade union heterogeneity," Economic Modelling, Elsevier, vol. 78(C), pages 60-72.
    15. 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.
    16. Fabio Berton & Anna Carreri & Francesco Devicienti & Andrea Ricci, 2023. "The collective voice of unions and workplace training in Italy: New insights from mixed methods," British Journal of Industrial Relations, London School of Economics, vol. 61(3), pages 595-622, September.
    17. Agénor, Pierre-Richard & Lim, King Yoong, 2018. "Unemployment, growth and welfare effects of labor market reforms," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 19-38.
    18. Clément Brébion, 2022. "The wage impact of being a works council representative in Germany: A case of strategic discrimination?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 418-455, October.
    19. Giannakopoulos, Nicholas & Laliotis, Ioannis, 2017. "Decentralized Bargaining and the Greek Labour Relations Reform (Law 4024/2011)," MPRA Paper 76513, University Library of Munich, Germany.
    20. Panu Poutvaara & Till Nikolka & Daniel Leithold & Katrin Oesingmann & Daniela Wech, 2017. "Comparative study about the powers and the representativeness of employee representatives in French and German enterprises," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 84.

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