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Estimating the wage premium of collective wage contracts: Evidence from longitudinal linked employer-employee data

  • Guertzgen, Nicole

Using a large-scale linked-employer-employee data set from western Germany, this paper presents new evidence on the wage premium of collective bargaining contracts. In contrast to previous studies, we seek to assess the extent to which differences in wages between workers in covered and uncovered firms arise from the non-random selection of workers and firms into collective bargaining coverage. By measuring the relative wage changes of workers employed in firms that change contract status, we obtain estimates that depart considerably from previous results relying on cross-sectional data. Results from analysing separate transitions show that leaving industry-level contracts is associated with subsequent wage losses. However, the results from a trendadjusted difference-in-difference approach indicate that the particularly the transitions to no-coverage appear to be associated with negative shocks. Overall, our findings provide no evidence of a 'true' wage effect of leaving wage bargaining, once differences in pre-transition wage growth are accounted for.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 12-073.

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Date of creation: 2012
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Handle: RePEc:zbw:zewdip:12073
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  4. Gürtzgen, Nicole, 2005. "Rent-Sharing and Collective Bargaining Coverage: Evidence from Linked Employer-Employee Data," ZEW Discussion Papers 05-90, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  16. Hartog, Joop & Leuven, Edwin & Teulings, Coen, 2002. "Wages and the bargaining regime in a corporatist setting: the Netherlands," European Journal of Political Economy, Elsevier, vol. 18(2), pages 317-331, June.
  17. David G. Blanchflower & Alex Bryson, 2010. "The Wage Impact of Trade Unions in the UK Public and Private Sectors," Economica, London School of Economics and Political Science, vol. 77(305), pages 92-109, 01.
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