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The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?

Author

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  • Brändle, Tobias

    () (Institut für Angewandte Wirtschaftsforschung (IAW))

  • Goerke, Laszlo

    () (IAAEU, University of Trier)

Abstract

A large number of articles have analysed 'the one constant' in the economic effects of trade unions, namely that collective bargaining reduces employment growth by two to four percentage points per year. Evidence is, however, mostly related to Anglo-Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked-employer-employee data for Germany, we find a negative correlation between being covered by a sector-wide bargaining agreement or firm-level contract and employment growth of about one percentage point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross-section data might be driven by selection.

Suggested Citation

  • Brändle, Tobias & Goerke, Laszlo, 2018. "The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?," IZA Discussion Papers 11518, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11518
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    References listed on IDEAS

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    1. Bernd Fitzenberger & Karsten Kohn & Alexander C. Lembcke, 2013. "Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany," ILR Review, Cornell University, ILR School, vol. 66(1), pages 169-197, January.
    2. Machin, Stephen J & Wadhwani, Sushil, 1991. "The Effects of Unions on Organisational Change and Employment," Economic Journal, Royal Economic Society, vol. 101(407), pages 835-854, July.
    3. Robert Krol & Shirley Svorny, 2007. "Unions and Employment Growth: Evidence from State Economic Recoveries," Journal of Labor Research, Springer, vol. 28(3), pages 525-535, July.
    4. Alex Bryson, 2004. "Unions And Employment Growth In British Workplaces During The 1990s: A Panel Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(4), pages 477-506, September.
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    More about this item

    Keywords

    job flows; employment growth; collective bargaining; trade unions;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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