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Rent-sharing : Does the Bargaining Regime Make a Difference? Theory and Empirical Evidence

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  • Gürtzgen, Nicole

Abstract

This paper analyses whether wages in Germany respond to firm-specific profitability conditions. Particular emphasis lies on the question of whether the extent of rent-sharing varies across different systems of wage determination. Those may be categorised into sector-specific wage agreements, firm-specific wage agreements and wage determination without any bargaining coverage. To derive testable hypotheses, we set up a theoretical model that analyses the sensitivity of wages to firm-specific conditions under different wage setting structures. The hypotheses are tested using an establishment-level panel data set from the mining and manufacturing sector. The results of the empirical analysis generally suggest that rent-sharing is present in Germany. However, the extent of rent-sharing is found to be significantly lower in establishments that are subject to a collective wage agreement - irrespective of whether the agreement is industry- or firm-specific. While pooled OLS estimates yield positive estimates of the rent-sharing coefficient in establishments that are covered by a collective contract, SYS-GMM-estimates accounting for unobserved heterogeneity and endogeneity of rents point to a rent-sharing coefficient of zero.

Suggested Citation

  • Gürtzgen, Nicole, 2005. "Rent-sharing : Does the Bargaining Regime Make a Difference? Theory and Empirical Evidence," ZEW Discussion Papers 05-15, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:2905
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    Citations

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    Cited by:

    1. Du Caju, Philip & Rycx, Francois & Tojerow, Ilan, 2008. "Rent-Sharing and the Cyclicality of Wage Differentials," IZA Discussion Papers 3844, Institute for the Study of Labor (IZA).
    2. Robert Plasman & François Rycx & Ilan Tojerow, 2006. "Industry wage differentials, unobserved ability, and rent-sharing: evidence from matched employer-employee, 1992-2005," DULBEA Working Papers 06-14.RS, ULB -- Universite Libre de Bruxelles.
    3. Kohn, Karsten & Lembcke, Alexander, 2007. "Wage distributions by bargaining regime: linked employer-employee data evidence from Germany," LSE Research Online Documents on Economics 19699, London School of Economics and Political Science, LSE Library.
    4. 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.
    5. Kuckulenz, Anja, 2006. "Wage and Productivity Effect of Continuing Training in Germany: A Sectoral Analysis," ZEW Discussion Papers 06-025, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Nicole Guertzgen, 2009. "Rent-sharing and Collective Bargaining Coverage: Evidence from Linked Employer-Employee Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 323-349, June.
    7. N. Guertzgen, 2010. "Rent-sharing and collective wage contracts-evidence from German establishment-level data," Applied Economics, Taylor & Francis Journals, vol. 42(22), pages 2835-2854.

    More about this item

    Keywords

    Rent-Sharing; Wage-Setting Structure; Unions; Panel Data;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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