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Collective Bargaining Networks and the Propagation of Shocks

Author

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  • Santiago Hermo

Abstract

How does collective bargaining shape the labor market response to economic shocks? I use novel Argentine administrative data to uncover the network of firms linked by collective bargaining and show that positive product-demand shocks to firms within a bargaining unit raise wages at other non-shocked firms in the same unit. Heterogeneous wage and employment responses indicate that propagation operates via collectively bargained wage floors. I develop and estimate a structural model where wage floors are determined in bargaining equilibrium. The model shows that the network shapes the bite of wage floors, which in turn determines the magnitude of shock propagation.

Suggested Citation

  • Santiago Hermo, 2025. "Collective Bargaining Networks and the Propagation of Shocks," RFBerlin Discussion Paper Series 25157, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:25157
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    Keywords

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    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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