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Firms' rents, workers' bargaining power and the union wage premium in France

Listed author(s):
  • Thomas Breda

    (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics)

In this paper, I study the wage premium associated with firm-level union recognition in France and show that this premium is due to a rent-extraction phenomenon. Using a large matched employer-employee dataset from a 2002 survey in France, I first estimate a series of wage determination models that control for individual and firm-level characteristics. I find that union recognition is associated with a 2-3% wage premium. To show that this premium results from a non-competitive phenomenon, I construct a bargaining model and estimate it empirically using a smaller but very detailed matched employer-employee dataset for 2004. The model predicts in particular that the wage premium obtained by unions should increase both with their bargaining power and with the amount of quasi-rents per worker available in the firms they organize. These predictions are validated empirically when I use the firms' market share as a proxy for their quasi-rents and the percentage of unionized as a proxy for the unions' bargaining power. All the results remain valid when I control for the firm-level workers' average productivity.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00564903.

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Date of creation: Sep 2010
Handle: RePEc:hal:psewpa:halshs-00564903
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00564903
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  1. Patrice Laroche, 2004. "Présence syndicale et performance financière des entreprises:une analyse statistique sur le cas français," Revue Finance Contrôle Stratégie, revues.org, vol. 7(3), pages 117-145, September.
  2. Robert Plasman & Michael Rusinek & François Rycx, 2007. "Wages and the bargaining regime under multi-level bargaining: Belgium, Denmark and Spain," ULB Institutional Repository 2013/9777, ULB -- Universite Libre de Bruxelles.
  3. David G. Blanchflower & Alex Bryson, 2010. "The Wage Impact of Trade Unions in the UK Public and Private Sectors," Economica, London School of Economics and Political Science, vol. 77(305), pages 92-109, 01.
  4. Ana Rute Cardoso & Pedro Portugal, 2005. "Contractual Wages and the Wage Cushion under Different Bargaining Settings," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 875-902, October.
  5. F. Fakhfakh & F. Fitzroy, 2003. "Basic Wages and Firm Characteristics : Rent-sharing in French Manufacturing," Working Papers ERMES 0311, ERMES, University Paris 2.
  6. Michael Rusinek & François Rycx, 2009. "Rent-sharing under Different Bargaining Regimes: Evidence from Linked Employer-Employee Data," Working Papers CEB 09-004.RS, ULB -- Universite Libre de Bruxelles.
  7. repec:adr:anecst:y:1996:i:41-42:p:09 is not listed on IDEAS
  8. Du Caju, Philip & Gautier, Erwan & Momferatou, Daphne & Ward-Warmedinger, Melanie E., 2008. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," IZA Discussion Papers 3867, Institute for the Study of Labor (IZA).
  9. John M. Abowd & Thomas Lemieux, 1991. "The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada," NBER Working Papers 3808, National Bureau of Economic Research, Inc.
  10. Alex Bryson & John Forth & Patrice Laroche, 2009. "Unions and Workplace Performance in Britain and France," CEP Discussion Papers dp0920, Centre for Economic Performance, LSE.
  11. Marie Leclair & Pascale Petit, 2004. "Présence syndicale dans les établissements : quel effet sur les salaires masculins et féminins ?," Économie et Statistique, Programme National Persée, vol. 371(1), pages 23-47.
  12. Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2005. "Insurance within the Firm," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 1054-1087, October.
  13. David Card & Sara De La Rica, 2006. "Firm-Level Contracting and the Structure of Wages in Spain," ILR Review, Cornell University, ILR School, vol. 59(4), pages 573-592, July.
  14. repec:nsr:niesrd:327 is not listed on IDEAS
  15. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 227-251.
  16. Yann Algan & Pierre Cahuc & Philippe Aghion, 2008. "Can Policy influence culture? Minimum Wage and the Quality of Labor relations," 2008 Meeting Papers 574, Society for Economic Dynamics.
  17. Ozkan Eren, 2009. "Does Membership Payoff for Covered Workers? A Distributional Analysis of the Free Rider Problem," ILR Review, Cornell University, ILR School, vol. 62(3), pages 367-380, April.
  18. Mahmood Araï & Gérard Ballot & Ali Skalli, 1996. "Différentiels intersectoriels de salaire et caractéristiques des employeurs en France," Économie et Statistique, Programme National Persée, vol. 299(1), pages 37-58.
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