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Let's Take Bargaining Models Seriously: The Decline in Union Power in Germany, 1992-2009

  • Hirsch, Boris

    ()

    (University of Erlangen-Nuremberg)

  • Schnabel, Claus

    ()

    (University of Erlangen-Nuremberg)

Building on the right-to-manage model of collective bargaining, this paper tries to infer union power from the observed results in wage setting. It derives a time-varying indicator of union strength and confronts it with annual data for Germany. The results show that union power was relatively stable in the 1990s but fell substantially (by almost one-third) from 1999 to 2007. Two-thirds of this fall in union power follow from the reduction in the labour share relative to the capital share whereas changes in the gap between the net wage and the income when unemployed account for the remaining third.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5875.

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Length: 20 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5875
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  1. Hirsch, Boris & Schnabel, Claus, 2010. "Women move differently: Job separations and gender," Discussion Papers 69, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  2. Addison, John T. & Schnabel, Claus & Wagner, Joachim, 2006. "The (Parlous) State of German Unions," IZA Discussion Papers 2000, Institute for the Study of Labor (IZA).
  3. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, March.
  4. Arpaia, Alfonso & Pérez, Esther & Pichelmann, Karl, 2009. "Understanding labour income share dynamics in Europe," MPRA Paper 15649, University Library of Munich, Germany.
  5. Fahr, René & Sunde, Uwe, 2009. "Did the Hartz Reforms Speed-Up the Matching Process? A Macro-Evaluation Using Empirical Matching Functions," Munich Reprints in Economics 20482, University of Munich, Department of Economics.
  6. John Pencavel, 2009. "How Successful Have Trade Unions Been? A Utility-Based Indicator of Union Well-Being," ILR Review, Cornell University, ILR School, vol. 62(2), pages 147-156, January.
  7. Jung, Sven & Schnabel, Claus, 2009. "Paying More than Necessary? The Wage Cushion in Germany," IZA Discussion Papers 4278, Institute for the Study of Labor (IZA).
  8. Francesca D'Auria & Cécile Denis & Karel Havik & Kieran Mc Morrow & Christophe Planas & Rafal Raciborski & Werner Roger & Alessandro Rossi, 2010. "The production function methodology for calculating potential growth rates and output gaps," European Economy - Economic Papers 420, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  9. Mosthaf, Alexander & Schank, Thorsten & Schnabel, Claus, 2009. "Low-wage employment versus unemployment: which one provides better prospects for women?," Discussion Papers 65, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  10. Hirsch, Boris & Schnabel, Claus, 2011. "Let's take bargaining models seriously: The decline in union power in Germany, 1992 - 2009," Discussion Papers 73, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  11. Booth, Alison L & Chatterji, Monojit, 1995. "Union Membership and Wage Bargaining When Membership is Not Compulsory," Economic Journal, Royal Economic Society, vol. 105(429), pages 345-60, March.
  12. Doiron, Denise J, 1992. "Bargaining Power and Wage-Employment Contracts in a Unionized Industry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 583-606, August.
  13. McDonald, Ian M & Suen, Anthony, 1992. "On the Measurement and Determination of Trade Union Power," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(2), pages 209-24, May.
  14. repec:cup:cbooks:9780521464673 is not listed on IDEAS
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