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


  • Thomas Breda

    () (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)


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.

Suggested Citation

  • Thomas Breda, 2015. "Firms' Rents, Workers' Bargaining Power and the Union Wage Premium," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01307709, HAL.
  • Handle: RePEc:hal:pseose:halshs-01307709
    DOI: 10.1111/ecoj.12198
    Note: View the original document on HAL open archive server:

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    Cited by:

    1. 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.
    2. de Pinto, Marco & Michaelis, Jochen, 2019. "The labor market effects of trade union heterogeneity," Economic Modelling, Elsevier, vol. 78(C), pages 60-72.
    3. 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).
    4. 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.
    5. Panu Poutvaara & Till Nikolka & Daniel Leithold & Katrin Oesingmann & Daniela Wech, 2017. "Vergleichende Studie über die Befugnisse und die Repräsentativität der Arbeitnehmervertreter in französischen und deutschen Unternehmen," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 84, October.
    6. Philippe Askenazy & Thomas Breda, 2019. "Electoral Democracy at Work," PSE Working Papers halshs-02191304, HAL.
    7. Dale-Olsen, Harald, 2019. "Creative Destruction, Social Security Uptake and Union Networks," IZA Discussion Papers 12546, Institute of Labor Economics (IZA).
    8. 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.
    9. 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.
    10. 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.
    11. de Pinto, Marco & Lingens, Jörg, 2019. "The impact of unionization costs when firm-selection matters," Labour Economics, Elsevier, vol. 60(C), pages 50-63.
    12. 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.

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