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Union Bargaining and Intra-Industry Productivity Differentials: Theory and Evidence from Germany

  • Brändle, Tobias
  • Baumann, Florian

This paper indicates that the extent of collective bargaining coverage in an industry may depend on the differences in firms productivity levels within the industry. Less pronounced differences in productivity levels make it easier to design collective wage contracts that are accepted by a wider range of firms within an industry. Higher dispersion in productivity levels gives rise to the use of firm-level wage agreements reached by unions, while coverage by industry-wide contracts is likely to decrease. We measure correlations between productivity variation and collective bargaining coverage in various industries using German linked-employer-employee data from 2000-2008 and find that the share of industry-wide collective bargaining agreements may indeed be negatively correlated with the dispersion of plant productivity within an industry, while the opposite might hold true for firm-level contracts.

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File URL: http://econstor.eu/bitstream/10419/79852/1/VfS_2013_pid_379.pdf
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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79852.

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Date of creation: 2013
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Handle: RePEc:zbw:vfsc13:79852
Contact details of provider: Web page: http://www.socialpolitik.org/
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  1. Fitzenberger, Bernd & Kohn, Karsten & Wang, Qingwei, 2006. "The Erosion of Union Membership in Germany: Determinants, Densities, Decompositions," IZA Discussion Papers 2193, Institute for the Study of Labor (IZA).
  2. Lembcke, Alexander C. & Kohn, Karsten & Fitzenberger, Bernd, 2008. "Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany," ZEW Discussion Papers 08-012, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Stephen Machin, 2000. "Union Decline in Britain," British Journal of Industrial Relations, London School of Economics, vol. 38(4), pages 631-645, December.
  4. John T. Addison & Alex Bryson & André Pahnke & Paulino Teixeira, 2010. "Slip Sliding Away: Further Union Decline in Germany and Britain," CEP Discussion Papers dp0971, Centre for Economic Performance, LSE.
  5. David G. Blanchflower, 2007. "International Patterns of Union Membership," British Journal of Industrial Relations, London School of Economics, vol. 45(1), pages 1-28, 03.
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  7. Barry T. Hirsch, 2008. "Sluggish Institutions in a Dynamic World: Can Unions and Industrial Competition Coexist?," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 153-176, Winter.
  8. Jimeno, Juan F. & Thomas, Carlos, 2013. "Collective bargaining, firm heterogeneity and unemployment," European Economic Review, Elsevier, vol. 59(C), pages 63-79.
  9. Chris Doucouliagos & Patrice Laroche, 2007. "Unions and Profitability: A Meta-Analysis," Economics Series 2007_01, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  10. Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," NBER Working Papers 11393, National Bureau of Economic Research, Inc.
  11. Addison, John T. & Teixeira, Paulino & Bryson, Alex & Pahnke, André, 2011. "The Structure of Collective Bargaining and Worker Representation: Change and Persistence in the German Model," IZA Discussion Papers 5987, Institute for the Study of Labor (IZA).
  12. Boeri, Tito & Burda, Michael C., 2008. "Preferences for Collective versus Individualised Wage Setting," IZA Discussion Papers 3365, Institute for the Study of Labor (IZA).
  13. Akerlof, George A & Yellen, Janet L, 1988. "Fairness and Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 44-49, May.
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  15. Ebell, Monique & Haefke, Christian, 2006. "Product Market Regulation and Endogenous Union Formation," IZA Discussion Papers 2222, Institute for the Study of Labor (IZA).
  16. Braun, Sebastian, 2011. "Unionisation structures, productivity and firm performance: New insights from a heterogeneous firm model," Labour Economics, Elsevier, vol. 18(1), pages 120-129, January.
  17. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, November.
  18. Emin M. Dinlersoz & Jeremy Greenwood, 2012. "The Rise and Fall of Unions in the U.S," NBER Working Papers 18079, National Bureau of Economic Research, Inc.
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  20. Laroche, P., 2000. "What do Unions do to Productivity? A Meta-Analysis," Papers 2000-5, Groupe de recherche en économie financière et en gestion des entreprises, Universite Nancy 2.
  21. repec:cen:wpaper:12-12 is not listed on IDEAS
  22. Corneo, Giacomo, 1995. "National wage bargaining in an internationally integrated product market," European Journal of Political Economy, Elsevier, vol. 11(3), pages 503-520, September.
  23. Michael Beckmann & Matthias Kräkel, 2011. "Internal Rent Seeking, Works Councils, and Optimal Establishment Size," Working papers 2011/14, Faculty of Business and Economics - University of Basel.
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