Employment and wage effects of extending collective bargaining agreements

Villanueva, Ernesto

doi:10.15185/izawol.136

Cited by 21 publications

(15 citation statements)

References 11 publications

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“…In doing this we follow the literature on monetary policy in heterogeneous agent models that emphasizes the different financial frictions faced by households (Debortoli and Galí ), and it is not obvious how such different frictions could map into labor market heterogeneities. In addition, our characterization of unionized labor markets that generate wage compression (in this case between Ricardian and non‐Ricardian workers) is consistent with the institutional features of European labor markets (Lindquist ; Mourre ; Villanueva ).…”

Section: The Modelsupporting

confidence: 73%

“…The implications of the LAMP hypothesis have been investigated in a number of theoretical studies (Albonico and Rossi 2014;Bilbiie 2008;Galí, López-Salido, and Vallés 2004;Motta and Tirelli 2012, 2015. Other theoretical studies have analyzed the potential role played by LAMP in allowing DSGE models to replicate certain business cycle facts, notably the consumption response to public expenditure shocks (Colciago 2011;Galí, López-Salido, and Vallés 2007) and to investment shocks (Furlanetto, Natvik, and Seneca 2013), and the reaction of output, hours, and consumption to productivity shocks (Furlanetto and Seneca 2012).…”

Section: Introductionmentioning

confidence: 99%

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Limited Asset Market Participation and the Euro Area Crisis: An Empirical Dsge Model

2019

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We estimate a medium‐scale dynamic stochastic general equilibrium model for the Euro area with limited asset market participation (LAMP). Our results suggest that in the recent European Monetary Union years LAMP is particularly sizable (39% during 1993–2012) and important to understand business cycle features. The Bayes factor and the forecasting performance show that the LAMP model is preferred to its representative household counterpart. In the representative agent model the risk premium shock is the main driver of output volatility in order to match consumption correlation with output. In the LAMP model this role is played by the investment‐specific shock, because non‐Ricardian households introduce a Keynesian multiplier effect and raise the correlation between consumption and investments. We also detect the contractionary role of monetary policy shocks during the post‐2007 years. In this period consumption of non‐Ricardian households fell dramatically, but this outcome might have been avoided by a more aggressive policy stance. (JEL C11, C13, C32, E21, E32, E37)

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Section: The Modelsupporting

confidence: 73%

Section: Introductionmentioning

confidence: 99%

Limited Asset Market Participation and the Euro Area Crisis: An Empirical Dsge Model

2019

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“…emphasizes the di¤erent …nancial frictions faced by households(Debortoli and Galí, 2017), and it is not obvious how such di¤erent frictions could map into labor market heterogeneities. In addition, our characterization of unionized labor markets that generate wage compression (in this case between Ricardian and non-Ricardian workers) is consistent with the institutional features of European labor markets(Lindquist, 2005;Mourre, 2005;Villanueva, 2015).…”

supporting

confidence: 69%

Limited Asset Market Participation and the Euro Area Crisis. An Empirical DSGE Model

2018

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We estimate a medium scale DSGE model for the Euro area with Limited Asset Market Participation (LAMP). Our results suggest that in the recent EMU years LAMP is particularly sizeable (39% during 1993-2012) and important to understand business cycle features. The Bayes factor and the forecasting performance show that the LAMP model is preferred to its representative household counterpart. In the RA model the risk premium shock is the main driver of output volatility in order to match consumption correlation with output. In the LAMP model this role is played by the investment-speci…c shock, because Non-Ricardian households introduce a Keynesian multiplier e¤ect and raise the correlation between consumption and investments. We also detect contractionary role of monetary policy shocks during the post-2007 years. In this period consumption of Non-Ricardian households fell dramatically, but this outcome might have been avoided by a more aggressive policy stance.

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“…Using French data, André (2012a) and Combault and Naouas (2015) show that actual wages are positively affected by wage floor changes. 2 Industry-level agreements are quasi automatically extended to all employees in an industry (see Villanueva, 2015, for a survey on extension procedures in Europe) and firms cannot opt out of industry-level agreements. 3 Magruder (2012) also reports similar institutional features of wage bargaining in South Africa and finds that centralised bargaining has a negative effect on employment.…”

Section: Introductionmentioning

confidence: 99%

The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France

2016

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Abstract:This paper examines empirically how industry-level wage floors are set in French industrylevel wage agreements and how the national minimum wage (NMW) interacts with industrylevel wage bargaining. For this, we use a unique dataset containing about 48,000 occupationspecific wage floors, in more than 340 French industries over the period [2006][2007][2008][2009][2010][2011][2012][2013][2014]. We find that the NMW has a significant impact on the seasonality and on the timing of the wage bargaining process. Inflation, past sectoral wage increases and real NMW increases are the main drivers of wage floor adjustments; elasticities of wage floors with respect to these macro variables are 0.6, 0.3 and 0.25 respectively. Wage floor elasticities to inflation and to the NMW both decrease along the wage floor distribution but are still positive for all levels of wage floors.Keywords: minimum wage, collective bargaining, wages. For that purpose, we collect a large and unique new data set containing all industry-specific scales of wage floors for more than 340 French industries (covering more than 90% of workers of the private sector) over the period 2006-2014. In each industry, wage floors are defined for a specific classification of representative occupations and are used by firms as a reference to set their wages. In our data set, we are able to compute the size of wage floor adjustments between two wage agreements for each occupation. Overall, our data set contains more than 48,000 wage floors for more than 6,000 different occupations defined in industry agreements.Our paper provides new stylized facts on how wage floors are adjusted in France. We first find that the frequency of wage floor adjustments is highly time-and duration-dependent: industrylevel wage agreements are much more frequent during the first quarter of the year, and the usual duration between two wage agreement signing (and so, between two wage floor adjustments) is one year. The frequency of wage floor adjustments is also positively affected by variations of macro variables such as inflation and the growth rate of aggregate wages. Concerning the size of wage floor adjustments, we provide evidence that past inflation plays a key role in 4 explaining the size of wage adjustments. Industry-specific shocks contribute to wage floor increases as long as NMW or inflation increases are not binding.Our second contribution is to investigate the interactions between NMW adjustments and the setting of industry-level wage floors. In France, one important channel of transmission of NMW increases to other wages may come from industry-level wage agreements. To assess the impact of the NMW increases on wage floors, we rely on a Tobit model to disentangle the simultaneous effects of NMW increases on the frequency of wage agreements and on the size of wage floor adjustments. Using changes in the macro variables since the last wage agreement in a given industry, we are able to construct industry-specific variables and to better identify their effects on wage floor...

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Employment and wage effects of extending collective bargaining agreements

Cited by 21 publications

References 11 publications

Limited Asset Market Participation and the Euro Area Crisis: An Empirical Dsge Model

Limited Asset Market Participation and the Euro Area Crisis: An Empirical Dsge Model

Limited Asset Market Participation and the Euro Area Crisis. An Empirical DSGE Model

The Impact of the National Minimum Wage on Industry-Level Wage Bargaining in France

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