IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp7474.html
   My bibliography  Save this paper

Indicative and Updated Estimates of the Collective Bargaining Premium in Germany

Author

Listed:
  • Addison, John T.

    (Durham University Business School)

  • Teixeira, Paulino

    (University of Coimbra)

  • Evers, Katalin

    (Institute for Employment Research (IAB), Nuremberg)

  • Bellmann, Lutz

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

This study provides updated evidence on the union contract differential in Germany using establishment-wide wage data and two estimation strategies. It provides pairwise estimates of the union differential based on separate samples of collective bargaining leavers and joiners vis-à-vis the corresponding counterfactual groups. It is reported that average wages increase by 3 to 3.5 percent after entering into a collective agreement and decrease by 3 to 4 percent after abandoning a collective agreement. Excluding establishments that experience mass layoffs little influences these net findings, although such establishments record wage losses – statistically insignificant for joiners but up to 10 percent in the case of leavers, as compared with the counterfactuals. The backdrop to these new indicative estimates, which are properly conditioned on establishment size and industry affiliation, inter al., is one of wage stagnation and continuing union decline.

Suggested Citation

  • Addison, John T. & Teixeira, Paulino & Evers, Katalin & Bellmann, Lutz, 2013. "Indicative and Updated Estimates of the Collective Bargaining Premium in Germany," IZA Discussion Papers 7474, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7474
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp7474.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fitzenberger, Bernd & Kohn, Karsten, 2006. "Gleicher Lohn für gleiche Arbeit? Zum Zusammenhang zwischen Gewerkschaftsmitgliedschaft und Lohnstruktur in Westdeutschland 1985?1997," ZEW Discussion Papers 06-006, ZEW - Leibniz Centre for European Economic Research.
    2. Michael C. Burda & Bernd Fitzenberger & Alexander Lembcke & Thorsten Vogel, 2008. "Unionization, Stochastic Dominance, and Compression of the Wage Distribution: Evidence from Germany," SFB 649 Discussion Papers SFB649DP2008-041, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    3. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising wage inequality, the decline of collective bargaining, and the gender wage gap," Labour Economics, Elsevier, vol. 17(5), pages 835-847, October.
    4. 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.
    5. Budd, John W & Na, In-Gang, 2000. "The Union Membership Wage Premium for Employees Covered by Collective Bargaining Agreements," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 783-807, October.
    6. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    7. Barry T. Hirsch, 2004. "Reconsidering Union Wage Effects: Surveying New Evidence on an Old Topic," Journal of Labor Research, Transaction Publishers, vol. 25(2), pages 233-266, April.
    8. John T Addison & Paulino Teixeira & André Pahnke & Lutz Bellmann, 2017. "The demise of a model? The state of collective bargaining and worker representation in Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 38(2), pages 193-234, May.
    9. Stephen Nickell & Luca Nunziata & Wolfgang Ochel, 2005. "Unemployment in the OECD Since the 1960s. What Do We Know?," Economic Journal, Royal Economic Society, vol. 115(500), pages 1-27, January.
    10. John Addison & Paulino Teixeira & Katalin Evers & Lutz Bellmann, 2012. "Is the Erosion Thesis Overblown? Evidence from the Orientation of Uncovered Employers," GEMF Working Papers 2012-07, GEMF, Faculty of Economics, University of Coimbra.
    11. Edward J. Schumacher, 1999. "What Explains Wage Differences Between Union Members and Covered Nonmembers?," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 493-512, January.
    12. David Card & Thomas Lemieux & W. Craig Riddell, 2004. "Unions and Wage Inequality," Journal of Labor Research, Transaction Publishers, vol. 25(4), pages 519-562, October.
    13. Ruback, Richard S & Zimmerman, Martin B, 1984. "Unionization and Profitability: Evidence from the Capital Market," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1134-1157, December.
    14. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
    15. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    16. Hermann Gartner & Thorsten Schank & Claus Schnabel, 2013. "Wage Cyclicality Under Different Regimes of Industrial Relations," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(2), pages 516-540, April.
    17. John DiNardo & David S. Lee, 2004. "Economic Impacts of Unionization on Private Sector Employers: 1984-2001," NBER Working Papers 10598, National Bureau of Economic Research, Inc.
    18. David G. Blanchflower & Alex Bryson, 2004. "What Effect Do Unions Have on Wages Now and Would Freeman and Medoff Be Surprised?," Journal of Labor Research, Transaction Publishers, vol. 25(3), pages 383-414, July.
    19. Bispinck, Reinhard & Dribbusch, Heiner & Schulten, Thorsten, 2010. "German collective bargaining in a European perspective: Continuous erosion or re-stabilisation of multi-employer agreements?," WSI Working Papers 171, The Institute of Economic and Social Research (WSI), Hans Böckler Foundation.
    20. 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.
    21. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 843-881.
    22. David S. Lee & Alexandre Mas, 2012. "Long-Run Impacts of Unions on Firms: New Evidence from Financial Markets, 1961--1999," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 333-378.
    23. Büttner, Thiess & Fitzenberger, Bernd, 1998. "Central wage bargaining and local wage flexibility: evidence from the entire wage distribution," ZEW Discussion Papers 98-39, ZEW - Leibniz Centre for European Economic Research.
    24. Wessels, Walter J, 1994. "Do Unionized Firms Hire Better Workers?," Economic Inquiry, Western Economic Association International, vol. 32(4), pages 616-629, October.
    25. Barry T. Hirsch & Edward J. Schumacher, 2004. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 689-722, July.
    26. Fitzenberger, Bernd & Franz, Wolfgang, 1999. "Der Flächentarifvertrag: Eine kritische Würdigung aus ökonomischer Sicht," ZEW Discussion Papers 99-57, ZEW - Leibniz Centre for European Economic Research.
    27. Gerlach Knut & Stephan Gesine, 2006. "Bargaining Regimes and Wage Dispersion," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(6), pages 629-645, December.
    28. Wolf Dieter Heinbach & Markus Spindler, 2007. "To Bind or Not to Bind Collectively? Decomposition of Bargained Wage Differences Using Counterfactual Distributions," IAW Discussion Papers 36, Institut für Angewandte Wirtschaftsforschung (IAW).
    29. Card, David, 1996. "The Effect of Unions on the Structure of Wages: A Longitudinal Analysis," Econometrica, Econometric Society, vol. 64(4), pages 957-979, July.
    30. Anke Hassel, 1999. "The Erosion of the German System of Industrial Relations," British Journal of Industrial Relations, London School of Economics, vol. 37(3), pages 483-505, September.
    31. Gabriele Fischer & Florian Janik & Dana Müller & Alexandra Schmucker, 2009. "European Data Watch: The IAB Establishment Panel - Things Users Should Know," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(1), pages 133-148.
    32. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    33. Addison, John T. & Bryson, Alex & Teixeira, Paulino & Pahnke, André & Bellmann, Lutz, 2010. "The State of Collective Bargaining and Worker Representation in Germany: The Erosion Continues," IZA Discussion Papers 5030, Institute of Labor Economics (IZA).
    34. Gesine Stephan & Knut Gerlach, 2005. "Wage settlements and wage setting: results from a multi-level model," Applied Economics, Taylor & Francis Journals, vol. 37(20), pages 2297-2306.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andréasson, Hannes, 2014. "The effect of decentralized wage bargaining on the structure of wages and firm performance," Ratio Working Papers 241, The Ratio Institute.
    2. Schnabel Claus, 2016. "United, Yet Apart? A Note on Persistent Labour Market Differences between Western and Eastern Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(2), pages 157-179, March.
    3. John T. Addison & Arnd Kölling & Paulino Teixeira, 2014. "Changes in Bargaining Status and Intra-Plant Wage Dispersion in Germany. A Case of (Almost) Plus Ça Change?," GEMF Working Papers 2014-15, GEMF, Faculty of Economics, University of Coimbra.
    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. Dale-Olsen, Harald, 2019. "Creative Destruction, Social Security Uptake and Union Networks," IZA Discussion Papers 12546, Institute of Labor Economics (IZA).
    6. Garloff, Alfred, 2016. "Side effects of the new German minimum wage on (un-)employment : first evidence from regional data," IAB-Discussion Paper 201631, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Raul Ramos & Esteban Sanromá & Hipólito Simón, 2018. "Wage differentials by bargaining regime in Spain (2002-2014). An analysis using matched employer-employee data," Working Papers 2018/23, Institut d'Economia de Barcelona (IEB).
    8. Ramos, Raul & Sanromá, Esteban & Simón, Hipólito, 2022. "Collective bargaining levels, employment and wage inequality in Spain," Journal of Policy Modeling, Elsevier, vol. 44(2), pages 375-395.
    9. Lutz Bellmann & Hans-Dieter Gerner & Olaf Hübler, 2014. "Effects of reciprocal concessions on employment and real capital," Economics Bulletin, AccessEcon, vol. 34(1), pages 494-509.
    10. Bernd Brandl, 2023. "Everything we do know (and don’t know) about collective bargaining: The Zeitgeist in the academic and political debate on the role and effects of collective bargaining," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 44(3), pages 660-678, August.
    11. Jelle Visser, 2016. "What happened to collective bargaining during the great recession?," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-35, December.
    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. John T. Addison & Pedro Portugal & Hugo Vilares, 2017. "Unions and Collective Bargaining in the Wake of the Great Recession: Evidence from Portugal," British Journal of Industrial Relations, London School of Economics, vol. 55(3), pages 551-576, September.
    14. Berninger, Ina & Schröder, Tim, 2017. "Inklusion oder Schließung? Gewerkschaftlicher Organisationsgrad, berufliche Geschlechtersegregation und der Gender Pay Gap [Inclusion or closure? Unionisation, occupational segregation and the gend," Industrielle Beziehungen. Zeitschrift für Arbeit, Organisation und Management, Verlag Barbara Budrich, vol. 24(2), pages 174-195.
    15. Uwe Jirjahn, 2015. "Research on Trade Unions and Collective Bargaining in Germany: The Contribution of Labor Economics," Research Papers in Economics 2015-10, University of Trier, Department of Economics.
    16. Arnd Kölling, 2022. "Shortage of Skilled Labor, Unions and the Wage Premium: A Regression Analysis with Establishment Panel Data for Germany," Journal of Labor Research, Springer, vol. 43(2), pages 239-259, June.
    17. Elin Svarstad & Ragnar Nymoen, 2023. "Wage inequality and union membership at the establishment level: An econometric study using Norwegian data," Oxford Economic Papers, Oxford University Press, vol. 75(2), pages 371-392.
    18. Alfred Garloff, 2019. "Did the German Minimum Wage Reform Influence (Un)employment Growth in 2015? Evidence from Regional Data," German Economic Review, Verein für Socialpolitik, vol. 20(3), pages 356-381, August.
    19. Ochsenfeld, Fabian, 2018. "The Relational Nature of Employment Dualization: Evidence from Subcontracting Establishments," SocArXiv ta4r6, Center for Open Science.

    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. Addison, John T. & Teixeira, Paulino & Stephani, Jens & Bellmann, Lutz, 2014. "Union Decline and the Coverage Wage Gap in Germany," IZA Discussion Papers 8257, Institute of Labor Economics (IZA).
    2. John Addison & Paulino Teixeira & Jens Stephani & Lutz Bellmann, 2012. "Can German Unions Still Cut It?," GEMF Working Papers 2012-19, GEMF, Faculty of Economics, University of Coimbra.
    3. 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.
    4. Callaway, Brantly & Collins, William J., 2018. "Unions, workers, and wages at the peak of the American labor movement," Explorations in Economic History, Elsevier, vol. 68(C), pages 95-118.
    5. Addison, John T. & Kölling, Arnd & Teixeira, Paulino, 2014. "Changes in Bargaining Status and Intra-Plant Wage Dispersion in Germany: A Case of (Almost) Plus Ça Change?," IZA Discussion Papers 8359, Institute of Labor Economics (IZA).
    6. Fernando Rios-Avila & Barry T. Hirsch, 2014. "Unions, Wage Gaps, and Wage Dispersion: New Evidence from the Americas," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(1), pages 1-27, January.
    7. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising wage inequality, the decline of collective bargaining, and the gender wage gap," Labour Economics, Elsevier, vol. 17(5), pages 835-847, October.
    8. Ramos, Raul & Sanromá, Esteban & Simón, Hipólito, 2018. "Wage Differentials by Bargaining Regime in Spain (2002-2014): An Analysis Using Matched Employer-Employee Data," IZA Discussion Papers 12013, Institute of Labor Economics (IZA).
    9. Nicole Gürtzgen, 2016. "Estimating the Wage Premium of Collective Wage Contracts: Evidence from Longitudinal Linked Employer–Employee Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 294-322, April.
    10. 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.
    11. James Bishop & Iris Chan, 2019. "Is Declining Union Membership Contributing to Low Wages Growth?," RBA Annual Conference Papers acp2019-06, Reserve Bank of Australia.
    12. Fitzenberger Bernd & Sommerfeld Katrin, 2016. "A Sequential Decomposition of the Drop in Collective Bargaining Coverage," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 236(1), pages 37-69, February.
    13. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.
    14. Uwe Jirjahn, 2013. "Der Beitrag der Arbeitsmarktökonomik zur Erforschung von Gewerkschaften und Tarifvertragsbeziehungen in Deutschland," Research Papers in Economics 2013-03, University of Trier, Department of Economics.
    15. Kerr, Andrew & Wittenberg, Martin, 2021. "Union wage premia and wage inequality in South Africa," Economic Modelling, Elsevier, vol. 97(C), pages 255-271.
    16. R. Alison Felix & James R. Hines, 2022. "Corporate taxes and union wages in the United States," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(6), pages 1450-1494, December.
    17. Uwe Jirjahn, 2015. "Research on Trade Unions and Collective Bargaining in Germany: The Contribution of Labor Economics," Research Papers in Economics 2015-10, University of Trier, Department of Economics.
    18. Ghaly, Mohamed & Kostakis, Alexandros & Stathopoulos, Konstantinos, 2021. "The (non-) effect of labor unionization on firm risk: Evidence from the options market," Journal of Corporate Finance, Elsevier, vol. 66(C).
    19. 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.
    20. 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.

    More about this item

    Keywords

    difference-in-differences; collective bargaining transitions; union contract premium; average wages; matching; Germany;
    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

    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:iza:izadps:dp7474. 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: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.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.