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Wage cyclicality under different regimes of industrial relations

  • Hermann Gartner
  • Thorsten Schenk
  • Claus Schnabel

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

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1654.

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Length: 29 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:kie:kieliw:1654
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