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Wage Cyclicality under Different Regimes of Industrial Relations

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  • Gartner, Hermann

    (Institute for Employment Research (IAB), Nuremberg)

  • Schank, Thorsten

    (University of Mainz)

  • Schnabel, Claus

    (University of Erlangen-Nuremberg)

Abstract

Since there is scant evidence on the role of industrial relations in wage cyclicality, this paper analyzes the effect of collective wage contracts and of works councils on real wage growth. Using linked employer-employee data for western Germany, we find that works councils affect wage growth only in combination with collective bargaining. Wage adjustments to positive and negative economic shocks are not always symmetric. Only under sectoral bargaining there is a (nearly symmetric) reaction to rising and falling unemployment. In contrast, wage growth in establishments without collective bargaining adjusts only to falling unemployment and is unaffected by rising unemployment.

Suggested Citation

  • Gartner, Hermann & Schank, Thorsten & Schnabel, Claus, 2010. "Wage Cyclicality under Different Regimes of Industrial Relations," IZA Discussion Papers 5228, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5228
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    More about this item

    Keywords

    wage cyclicality; wage bargaining; works council; Germany;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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