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Wage Distributions by Bargaining Regime: Linked Employer-Employee Data Evidence from Germany

Author

Listed:
  • Kohn, Karsten

    (KfW Bankengruppe)

  • Lembcke, Alexander C.

    (CEP, London School of Economics)

Abstract
Using linked employer-employee data from the German Structure of Earnings Survey 2001, this paper provides a comprehensive picture of the wage structure in three wage-setting regimes prevalent in the German system of industrial relations. We analyze wage distributions for various labor market subgroups by means of kernel density estimation, variance decompositions, and individual and firm-level wage regressions. Unions' impact through collective and firm-level bargaining mainly works towards a higher wage level and reduced overall and residual wage dispersion. Yet observed effects are considerably heterogeneous across different labor market groups. There is no clear evidence for wage floors formed by collectively bargained low wage brackets which would operate as minimum wages for different groups of workers.

Suggested Citation

  • Kohn, Karsten & Lembcke, Alexander C., 2007. "Wage Distributions by Bargaining Regime: Linked Employer-Employee Data Evidence from Germany," IZA Discussion Papers 2849, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2849
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    References listed on IDEAS

    as
    1. Addison, John T. & Teixeira, Paulino & Zwick, Thomas, 2006. "Works Councils and the Anatomy of Wages," IZA Discussion Papers 2474, Institute of Labor Economics (IZA).
    2. 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.
    3. Bernd Fitzenberger & Karsten Kohn & Qingwei Wang, 2011. "The erosion of union membership in Germany: determinants, densities, decompositions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(1), pages 141-165, January.
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    11. John T. Addison & Claus Schnabel (ed.), 2003. "International Handbook of Trade Unions," Books, Edward Elgar Publishing, number 2705.
    12. Christian Dustmann & Uta Schönberg, 2009. "Training and Union Wages," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 363-376, May.
    13. 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.
    14. Richard B. Freeman, 1982. "Union Wage Practices and Wage Dispersion within Establishments," ILR Review, Cornell University, ILR School, vol. 36(1), pages 3-21, October.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Maarten Keune, 2021. "Inequality between capital and labour and among wage-earners: the role of collective bargaining and trade unions," Transfer: European Review of Labour and Research, , vol. 27(1), pages 29-46, February.
    3. 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).
    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. 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.
    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. Brändle, Tobias & Heinbach, Wolf Dieter & Maier, Michael F., 2011. "Tarifliche Öffnung in Deutschland: Ausmaß, Determinanten, Auswirkungen (Flexibilisation in the German system of wage bargaining: extent, determinants, impacts)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 44(1/2), pages 163-172.
    8. Aretz, Bodo & Busl, Claudia & Gürtzgen, Nicole & Hogrefe, Jan & Kappler, Marcus & Steffes, Susanne & Westerheide, Peter, 2009. "Endbericht zum Forschungsauftrag fe 13/08: "Ursachenanalyse der Verschiebung in der funktionalen Einkommensverteilung in Deutschland" (Aktenzeichen I A 3 - Vw 3170/08/10035)," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 110510.
    9. Karsten Kohn & Alexander Lembcke, 2007. "Wage distributions by bargaining regime," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 1(3), pages 247-261, December.
    10. repec:hum:wpaper:sfb649dp2008-41 is not listed on IDEAS
    11. McGuinness, Seamus & Kelly, Elish & O'Connell, Philip J., 2008. "The Impact of Wage Bargaining Regime on Firm-Level Competitiveness and Wage Inequality: The Case of Ireland," Papers WP266, Economic and Social Research Institute (ESRI).
    12. repec:zbw:sfb649:sfb649dp2008-41 is not listed on IDEAS
    13. Guertzgen Nicole, 2009. "Firm Heterogeneity and Wages under Different Bargaining Regimes: Does a Centralised Union Care for Low-Productivity Firms?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(2-3), pages 239-253, April.
    14. repec:zbw:sfb649:sfb649dp2008-04 is not listed on IDEAS

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    More about this item

    Keywords

    wage equations; collective wage bargaining; wage structure; kernel density estimation; variance decomposition; German Structure of Earnings Survey;
    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
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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