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Is There a Union Wage Premium in Germany and Which Workers Benefit Most?

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  • Marina Bonaccolto-Töpfer
  • Claus Schnabel

Abstract

Using representative data from the German Socio-Economic Panel (SOEP), this paper finds a statistically significant union wage premium in Germany of almost three percent which is not simply a collective bargaining premium. Given that the union membership fee is typically about one percent of workers’ gross wages, this finding suggests that it pays off to be a union member. Our results show that the wage premium differs substantially between various occupations and educational groups, but not between men and women. We do not find that union wage premia are higher for those occupations and workers which constitute the core of union membership. Rather, unions seem to care about disadvantaged workers and pursue a wider social agenda.

Suggested Citation

  • Marina Bonaccolto-Töpfer & Claus Schnabel, 2023. "Is There a Union Wage Premium in Germany and Which Workers Benefit Most?," SOEPpapers on Multidisciplinary Panel Data Research 1180, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp1180
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    References listed on IDEAS

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    1. Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-710, November.
    2. Boris Hirsch & Philipp Lentge & Claus Schnabel, 2022. "Uncovered workers in plants covered by collective bargaining: Who are they and how do they fare?," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 929-945, December.
    3. Visser, Jelle., 2019. "Trade unions in the balance," ILO Working Papers 995046393402676, International Labour Organization.
    4. Hermann Gartner & Thorsten Schank & Claus Schnabel, 2013. "Wage Cyclicality Under Different Regimes of Industrial Relations," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(2), pages 516-540, April.
    5. S. Rosen, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 36(2), pages 185-196.
    6. Goebel Jan & Grabka Markus M. & Liebig Stefan & Kroh Martin & Richter David & Schröder Carsten & Schupp Jürgen, 2019. "The German Socio-Economic Panel (SOEP)," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(2), pages 345-360, April.
    7. repec:iza:izawol:journl:y:2014:p:35 is not listed on IDEAS
    8. Alex Bryson, 2014. "Union wage effects," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-35, July.
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    Cited by:

    1. 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.
    2. Theresa Geißler & Laszlo Goerke, 2023. "Educational Mismatch and Labour Market Institutions: The Role of Gender," Working Papers 2023.14, International Network for Economic Research - INFER.

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    More about this item

    Keywords

    Union wage premium; collective bargaining; union membership; Germany;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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