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What a Difference Trade Makes - Export Activity and the Flexibility of Collective Bargaining Agreements

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Abstract

The prevalence of opening clauses in collective bargaining agreements may indicate a tendency to a higher decentralised wage settlement. Increasing competition on international product markets is assumed to be one reason for wage-setting decentralisation, whereas theoretical explanations focus currently on the change of production structure and the impact of exogenous shocks. Incorporating stylised facts about exporting firms, new trade models suggest a different way of adjustment to increasing competition depending on a firm's nature. While the most productive exporters expand into new markets, small, less productive non-exporters are threatened by import competition. Based on the model from Bernard et al. (2003), we apply the theoretical implications to explain why decentralisation in bargaining may arise. We examine in a second step whether small, less productive, non-exporting firms paying low average wages, possess a higher propensity to use opening clauses than more productive, large exporters with a high wage level. Based on IAB Establishment Data covering the German Manufacturing, our results indicate that firms exporting to EMU countries -- but not exporters in general -- have a lower propensity of using opening clauses than non-exporters. However, inconsistent with theory, slight evidence suggests a rising propensity with increasing firm size and increasing wage level.

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  • Wolf Dieter Heinbach & Stefanie Schröpfer, 2007. "What a Difference Trade Makes - Export Activity and the Flexibility of Collective Bargaining Agreements," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 293/2007, Department of Economics, University of Hohenheim, Germany.
  • Handle: RePEc:hoh:hohdip:293
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    1. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
    2. Andrew Bernard & Joachim Wagner, 1997. "Exports and success in German manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 133(1), pages 134-157, March.
    3. Wagner, Joachim, 2007. "Productivity and Size of the Export Market: Evidence for West and East German Plants, 2004," IZA Discussion Papers 2661, Institute of Labor Economics (IZA).
    4. Jensen, Uwe & Rässler, Susanne, 2007. "The effects of collective bargaining on firm performance : new evidence based on stochastic production frontiers and multiply imputed German establishment data," IAB-Forschungsbericht 200703, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053.
    6. Wolf Dieter Heinbach & Stefanie Schröpfer, 2007. "Typisierung der Tarifvertragslandschaft. Eine Clusteranalyse der tarifvertraglichen Öffnungsklauseln," IAW Discussion Papers 28, Institut für Angewandte Wirtschaftsforschung (IAW).
    7. Thorsten Schank & Claus Schnabel & Joachim Wagner, 2016. "Do Exporters Really Pay Higher Wages? First Evidence from German Linked Employer–Employee Data," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 5, pages 177-213, World Scientific Publishing Co. Pte. Ltd..
    8. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    9. Tamás Bartus, 2005. "Estimation of marginal effects using margeff," Stata Journal, StataCorp LP, vol. 5(3), pages 309-329, September.
    10. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    11. Jens Matthias Arnold & Katrin Hussinger, 2005. "Export Behavior and Firm Productivity in German Manufacturing: A Firm-Level Analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(2), pages 219-243, July.
    12. Wolf Heinbach, 2007. "Wages in wage-setting regimes with opening clauses," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 1(3), pages 233-245, December.
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    Cited by:

    1. Brändle, Tobias & Heinbach, Wolf Dieter & Maier, Michael F., 2011. "Tarifliche Öffnung in Deutschland: Ausmaß, Determinanten, Auswirkungen (Flexibilisation in the German system of wage bargaining: extent, determinants, impacts)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(1/2), pages 163-172.

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    More about this item

    Keywords

    trade model; opening clauses; collective bargaining;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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