IDEAS home Printed from https://ideas.repec.org/p/iaa/dpaper/202503.html
   My bibliography  Save this paper

Trade Union Membership and Bonus Payments: German Survey Evidence

Author

Listed:
  • Marco Clemens

    (Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University)

  • Laszlo Goerke

    (Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University)

Abstract

This study provides the first comprehensive investigation of the relationship between trade union membership and non-performance-oriented bonuses. We expect a positive impact of union membership because members benefit from special entitlements, increased bargaining power and informational advantages. Using data from the German Socio-economic panel (GSOEP), we observe that union members are more likely to receive at least one bonus payment per year, a higher number of bonuses, and a higher amount than comparable non-members. We also observe the positive union membership effect for employees covered by collective bargaining or co-determination via works councils. Employing a novel instrumental variable, we find evidence of a positive effect of union membership on the number and level of bonus payments. Furthermore, higher bonuses do not go along with wage decreases.

Suggested Citation

  • Marco Clemens & Laszlo Goerke, 2025. "Trade Union Membership and Bonus Payments: German Survey Evidence," IAAEU Discussion Papers 202503, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    • Handle: RePEc:iaa:dpaper:202503
    as

    Download full text from publisher

    File URL: https://www.iaaeu.de/images/DiscussionPaper/2025_03.pdf
    File Function: First version, 2025
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marina Bonaccolto-Töpfer & Claus Schnabel, 2023. "Is There a Union Wage Premium in Germany and Which Workers Benefit Most?," Economies, MDPI, vol. 11(2), pages 1-14, February.
    2. Morten Bennedsen & Elena Simintzi & Margarita Tsoutsoura & Daniel Wolfenzon, 2022. "Do Firms Respond to Gender Pay Gap Transparency?," Journal of Finance, American Finance Association, vol. 77(4), pages 2051-2091, August.
    3. Ali Fakih, 2018. "What Determines Vacation Leave? The Role Of Gender," Bulletin of Economic Research, Wiley Blackwell, vol. 70(1), pages 1-19, January.
    4. Simon Jäger & Shakked Noy & Benjamin Schoefer, 2022. "The German Model of Industrial Relations: Balancing Flexibility and Collective Action," Journal of Economic Perspectives, American Economic Association, vol. 36(4), pages 53-80, Fall.
    5. John Garen, 1999. "Unions, incentive systems, and job design," Journal of Labor Research, Springer, vol. 20(4), pages 589-603, December.
    6. Fernández-Val, Iván, 2009. "Fixed effects estimation of structural parameters and marginal effects in panel probit models," Journal of Econometrics, Elsevier, vol. 150(1), pages 71-85, May.
    7. Fakih, Ali & Ghazalian, Pascal L., 2013. "Female Labour Force Participation in MENA's Manufacturing Sector: The Implications of Firm-Related and National Factors," IZA Discussion Papers 7197, Institute of Labor Economics (IZA).
    8. 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.
    9. Paul Miller & Charles Mulvey, 1992. "Trade Unions, Collective Voice and Fringe Benefits," The Economic Record, The Economic Society of Australia, vol. 68(2), pages 125-141, June.
    10. Héctor Gutiérrez Rufrancos, 2019. "Are There Gains to Joining a Union? Evidence from Mexico," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 676-712, September.
    11. Samuel Dodini & Kjell G. Salvanes & Alexander Willén & Li Zhu & Alexander L.P. Willén, 2023. "The Career Effects of Union Membership," CESifo Working Paper Series 10469, CESifo.
    12. Boris Hirsch & Steffen Mueller, 2020. "Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1119-1146, October.
    13. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    14. Matthew Knepper, 2020. "From the Fringe to the Fore: Labor Unions and Employee Compensation," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 98-112, March.
    15. Montgomery, Edward & Shaw, Kathryn, 1997. "Pensions and Wage Premia," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 510-522, July.
    16. Brändle, Tobias, 2024. "Unions and Collective Bargaining: The Influence on Wages, Employment and Firm Survival," GLO Discussion Paper Series 1457, Global Labor Organization (GLO).
    17. John T. Addison & Paulino Teixeira & Thomas Zwick, 2010. "German Works Councils and the Anatomy of Wages," ILR Review, Cornell University, ILR School, vol. 63(2), pages 247-270, January.
    18. Laszlo Goerke & Sabrina Jeworrek & Markus Pannenberg, 2015. "Trade union membership and paid vacation in Germany," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-26, December.
    19. Adams, Renée & Almeida, Heitor & Ferreira, Daniel, 2009. "Understanding the relationship between founder-CEOs and firm performance," Journal of Empirical Finance, Elsevier, vol. 16(1), pages 136-150, January.
    20. Ali Fakih, 2014. "Vacation Leave, Work Hours, and Wages: New Evidence from Linked Employer–Employee Data," LABOUR, CEIS, vol. 28(4), pages 376-398, December.
    21. Ellguth, Peter & Kohaut, Susanne, 2022. "Tarifbindung und betriebliche Interessenvertretung: Ergebnisse aus dem IAB-Betriebspanel 2021," WSI-Mitteilungen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 75(4), pages 328-336.
    22. 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.
    23. John W. Budd, 2005. "The Effect of Unions on Employee Benefits: Updated Employer Expenditure Results," Journal of Labor Research, Transaction Publishers, vol. 26(4), pages 669-676, November.
    24. Richard B. Freeman, 1981. "The Effect of Unionism on Fringe Benefits," ILR Review, Cornell University, ILR School, vol. 34(4), pages 489-509, July.
    25. Jiafeng Chen & Jonathan Roth, 2024. "Logs with Zeros? Some Problems and Solutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(2), pages 891-936.
    26. Goerke Laszlo & Pannenberg Markus, 2004. "Norm-Based Trade Union Membership: Evidence for Germany," German Economic Review, De Gruyter, vol. 5(4), pages 481-504, December.
    27. John DiNardo & David S. Lee, 2004. "Economic Impacts of New Unionization on Private Sector Employers: 1984–2001," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1383-1441.
    28. Roel Dom, 2019. "Semi-Autonomous Revenue Authorities in Sub-Saharan Africa: Silver Bullet or White Elephant," Journal of Development Studies, Taylor & Francis Journals, vol. 55(7), pages 1418-1435, July.
    29. Francis Green, 1997. "Union Recognition and Paid Holiday Entitlement," British Journal of Industrial Relations, London School of Economics, vol. 35(2), pages 243-255, June.
    30. Erling Barth & Alex Bryson & Harald Dale-Olsen, 2020. "Union Density Effects on Productivity and Wages," The Economic Journal, Royal Economic Society, vol. 130(631), pages 1898-1936.
    31. John Mullahy & Edward C. Norton, 2024. "Why Transform Y? The Pitfalls of Transformed Regressions with a Mass at Zero," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(2), pages 417-447, April.
    32. Ellguth, Peter & Kohaut, Susanne, 2020. "Tarifbindung und betriebliche Interessenvertretung: Aktuelle Ergebnisse aus dem IAB-Betriebspanel 2019," WSI-Mitteilungen, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 73(4), pages 278-285.
    33. repec:bla:ecorec:v:68:y:1992:i:201:p:125-41 is not listed on IDEAS
    34. Booth, Alison L & Frank, Jeff, 1999. "Earnings, Productivity, and Performance-Related Pay," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 447-463, July.
    35. Joseph G. Altonji & Emiko Usui, 2007. "Work Hours, Wages, and Vacation Leave," ILR Review, Cornell University, ILR School, vol. 60(3), pages 408-428, April.
    36. Tae-Youn Park & Eun-Suk Lee & John W. Budd, 2019. "What Do Unions Do for Mothers? Paid Maternity Leave Use and the Multifaceted Roles of Labor Unions," ILR Review, Cornell University, ILR School, vol. 72(3), pages 662-692, May.
    37. John W. Budd, 2004. "Non-Wage Forms of Compensation," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 597-622, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Björn Becker & Laszlo Goerke & Yue Huang, 2024. "Trade Union Membership and Life Satisfaction," IAAEU Discussion Papers 202408, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    2. 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.
    3. Goerke, Laszlo & Huang, Yue, 2022. "Job satisfaction and trade union membership in Germany," Labour Economics, Elsevier, vol. 78(C).
    4. Laszlo Goerke & Cinzia Rienzo, 2025. "The Union Wage Mark-up for Immigrants in the United States," IAAEU Discussion Papers 202501, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    5. Laszlo Goerke & Sabrina Jeworrek, 2021. "Paid vacation use: The role of works councils," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 42(3), pages 473-503, August.
    6. Laszlo Goerke & Sabrina Jeworrek & Markus Pannenberg, 2015. "Trade union membership and paid vacation in Germany," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-26, December.
    7. Claus Schnabel, 2025. "Unions and employers’ associations in Germany: a survey of their membership, density and bargaining coverage," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 59(1), pages 1-16, December.
    8. 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.
    9. Brändle, Tobias, 2024. "Unions and Collective Bargaining: The Influence on Wages, Employment and Firm Survival," GLO Discussion Paper Series 1457, Global Labor Organization (GLO).
    10. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
    11. Thomas Hofmarcher, 2021. "The effect of paid vacation on health: evidence from Sweden," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 929-967, July.
    12. Héctor Gutiérrez Rufrancos, 2019. "Are There Gains to Joining a Union? Evidence from Mexico," British Journal of Industrial Relations, London School of Economics, vol. 57(3), pages 676-712, September.
    13. Ali Fakih, 2018. "What Determines Vacation Leave? The Role Of Gender," Bulletin of Economic Research, Wiley Blackwell, vol. 70(1), pages 1-19, January.
    14. Goerke, Laszlo & Pannenberg, Markus, 2023. "Minimum Wage Non-compliance: The Role of Co-determination," IZA Discussion Papers 16621, Institute of Labor Economics (IZA).
    15. Lu, Yi & Tao, Zhigang & Wang, Yijiang, 2010. "Union effects on performance and employment relations: Evidence from China," China Economic Review, Elsevier, vol. 21(1), pages 202-210, March.
    16. Uwe Jirjahn & Jens Mohrenweiser, 2021. "Works councils and organizational gender policies in Germany," British Journal of Industrial Relations, London School of Economics, vol. 59(4), pages 1020-1048, December.
    17. Silliman, Mikko & Willén, Alexander, 2024. "Worker Power, Immigrant Sorting, and Firm Dynamics," Discussion Paper Series in Economics 13/2024, Norwegian School of Economics, Department of Economics.
    18. Dodini, Samuel & Stansbury, Anna & Willén, Alexander, 2023. "How Do Firms Respond to Unions?," Discussion Paper Series in Economics 25/2023, Norwegian School of Economics, Department of Economics.
    19. Jorge Davalos & Monica Puoma Lambon-Quayefio & Samuel B. Manu, 2017. "An empirical assessment of the union facilitation effect in the Ghanaian labor market Author-Name: Nkechi S. Owoo," Working Papers PMMA 2017-08, PEP-PMMA.
    20. Dodini, Samuel & Willén, Alexander & Zhu, Julia Li, 2023. "The Role of Labor Unions in Immigrant Integration," Discussion Paper Series in Economics 24/2023, Norwegian School of Economics, Department of Economics.

    More about this item

    Keywords

    bonus payments; collective bargaining; GSOEP; trade union membership;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iaa:dpaper:202503. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adrian Chadi (email available below). General contact details of provider: https://edirc.repec.org/data/iaaegde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.