IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2507.01458.html

Pay Clauses in Public Procurement: The Wage Impact of Collective Bargaining Compliance Laws in Germany

Author

Listed:
  • Vinzenz Pyka

Abstract

Using administrative data from Germany, this study provides first evidence on the wage effects of collective bargaining compliance laws. These laws require establishments receiving public contracts to pay wages set by a representative collective agreement, even if they are not formally bound by one. Leveraging variation in the timing of law implementation across federal states, and focusing on the public transport sector -- where regulation is uniform and demand is driven solely by state-level needs -- I estimate dynamic treatment effects using event-study designs. The results indicate that within five years of the law's implementation, wage increases were on average 2.9\% to 4.6\% higher in federal states with such a law compared to those without one -- but only in East Germany. These findings highlight the potential for securing collectively agreed wages in times of declining collective bargaining coverage.

Suggested Citation

  • Vinzenz Pyka, 2025. "Pay Clauses in Public Procurement: The Wage Impact of Collective Bargaining Compliance Laws in Germany," Papers 2507.01458, arXiv.org.
    • Handle: RePEc:arx:papers:2507.01458
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2507.01458
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Clément de Chaisemartin & Xavier D'Haultfœuille, 2020. "Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects," American Economic Review, American Economic Association, vol. 110(9), pages 2964-2996, September.
    2. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
    3. Datta, Nikhil & Machin, Stephen, 2024. "Government Contracting and Living Wages > Minimum Wages," IZA Discussion Papers 17117, IZA Network @ LISER.
    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. John T. Addison, 2025. "The Present and Future of Works Councils and Changes in Collective Bargaining in Germany," Journal of Labor Research, Springer, vol. 46(3), pages 162-191, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pyka, Vinzenz, 2025. "Pay clauses in public procurement: The wage impact of collective bargaining compliance laws in Germany," Discussion Papers 132, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    2. Marini, Marco A. & Nocito, Samuel, 2025. "Climate activism favors pro-environmental consumption," European Journal of Political Economy, Elsevier, vol. 86(C).
    3. Isabella Giorgetti & Matteo Picchio, 2021. "One billion euro programme for early childcare services in Italy," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 460-492, July.
    4. Jorge Luis García, 2025. "Guaranteed Employment in Rural India: Intra-Household Labor and Resource Allocation Consequences," NBER Working Papers 33494, National Bureau of Economic Research, Inc.
    5. Meinhofer, Angélica & Witman, Allison E. & Hinde, Jesse M. & Simon, Kosali, 2021. "Marijuana liberalization policies and perinatal health," Journal of Health Economics, Elsevier, vol. 80(C).
    6. Chen, Jidong & Shi, Xinzheng & Zhang, Ming-ang & Zhang, Sihan, 2024. "Centralization of environmental administration and air pollution: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    7. Alexander Karaivanov & Dongwoo Kim & Shih En Lu & Hitoshi Shigeoka, 2022. "COVID-19 vaccination mandates and vaccine uptake," Nature Human Behaviour, Nature, vol. 6(12), pages 1615-1624, December.
    8. Sunny R. Karim & Morten {O}rregaard Nielsen & James G. MacKinnon & Matthew D. Webb, 2026. "Improved Inference for CSDID Using the Cluster Jackknife," Papers 2602.12043, arXiv.org.
    9. Balmford, Ben & Collins, Joseph & Day, Brett & Lindsay, Luke & Peacock, James, 2023. "Pricing rules for PES auctions: Evidence from a natural experiment," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    10. Elisabetta Calabresi, 2024. "“Don’t Leave Me Alone†: Unilateral Divorce and Intimate Partner Violence," Working Papers - Economics wp2024_17.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    11. Karaivanov, Alexander & Lu, Shih En & Shigeoka, Hitoshi & Chen, Cong & Pamplona, Stephanie, 2021. "Face masks, public policies and slowing the spread of COVID-19: Evidence from Canada," Journal of Health Economics, Elsevier, vol. 78(C).
    12. Cardinali, Rebecca & Lusher, Lester & Taylor, Rebecca L.C. & Villas-Boas, Sofia B., 2025. "Does automation reduce stigma? The effect of self-checkout register adoption on purchasing decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 237(C).
    13. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    14. Bruno Ferman, 2023. "Inference in difference‐in‐differences: How much should we trust in independent clusters?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(3), pages 358-369, April.
    15. Mariana Zerpa, 2025. "Short- and medium-run impacts of preschool education: evidence from state pre-K programs," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(3), pages 1-39, September.
    16. Ferrazares, Toshio, 2024. "Monitoring Police with Body-Worn Cameras: Evidence from Chicago," Journal of Urban Economics, Elsevier, vol. 141(C).
    17. Clarke, Damian & Larroulet, Pilar & Pailañir, Daniel & Quintana, Daniela, 2023. "Schools as Safety Nets: Break-Downs and Recovery in Reporting of Violence against Children," IZA Discussion Papers 15859, IZA Network @ LISER.
    18. Zhang, Shiying & Huang, Ao, 2022. "The long-term effects of automatic grade promotion on child development," China Economic Review, Elsevier, vol. 74(C).
    19. Oana Borcan & James Merewood, 2022. "Positive Disruption? Meritocratic Principal Selection and Student Achievement," University of East Anglia School of Economics Working Paper Series 2022-11, School of Economics, University of East Anglia, Norwich, UK..
    20. Traviss Cassidy & Mark Dincecco & Ugo Antonio Troiano, 2024. "The Introduction of the Income Tax, Fiscal Capacity, and Migration: Evidence from US States," American Economic Journal: Economic Policy, American Economic Association, vol. 16(1), pages 359-393, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:arx:papers:2507.01458. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.