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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 - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, 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. Plasman, Robert & Rusinek, Michael & Rycx, Francois, 2006. "Wages and the Bargaining Regime under Multi-level Bargaining: Belgium, Denmark and Spain," IZA Discussion Papers 1990, Institute for the Study of Labor (IZA).
  2. Philip Du Caju & Erwan Gautier & Daphne Momferatu & Melanie Ward-Warmedinger, 2009. "Institutional Features of Wage Bargaining in 23 European Countries, the US and Japan," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 12(2), pages 57-108, Winter.
  3. 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.
  4. 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.
  5. 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.
  6. Fathi Fakhfakh & Felix FitzRoy, 2004. "Basic Wages and Firm Characteristics: Rent Sharing in French Manufacturing," LABOUR, CEIS, vol. 18(4), pages 615-631, December.
  7. Michael Rusinek & François Rycx, 2013. "Rent-Sharing under Different Bargaining Regimes: Evidence from Linked Employer–Employee Data," British Journal of Industrial Relations, London School of Economics, vol. 51(1), pages 28-58, 03.
  8. 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.
  9. 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.
  10. John A. Abowd & Thomas Lemieux, 1993. "The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 983-1014.
  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. repec:adr:anecst:y:1996:i:41-42:p:09 is not listed on IDEAS
  13. 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.
  14. 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.
  15. Dr Alex Bryson & John Forth, 2009. "Unions and Workplace Performance in Britain and France," NIESR Discussion Papers 327, National Institute of Economic and Social Research.
  16. repec:nsr:niesrd:327 is not listed on IDEAS
  17. 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.
  18. 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.
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