International Trade and Collective Bargaining Outcomes: Evidence from German Employer–Employee Data

Abstract

In theoretical trade models with variable mark‐ups and collective wage bargaining, exposure to international markets might reduce the exporter wage premium. We test this prediction using linked German employer–employee data covering the years 1996–2007. To separate the rent‐sharing mechanism from assortative matching, we exploit individual worker information to construct profitability measures that are free of skill composition. Our results show that rent‐sharing is less pronounced in more export‐intensive firms or in more open industries. The exporter wage premium is highest for low‐productivity firms. In line with theory, these findings are unique to the subsample of plants covered by collective bargaining.

The role of institutions in explaining wage determination in the Eurozone: A panel cointegration approach

“…Accordingly, trade unions are more cautious about the negative effects of wage rises on employment and moderate their wage demands. These theoretical predictions are confirmed by Felbermayr, Hauptmann and Schmerer (2014), who find that a surge in the export intensity of firms covered by collective bargaining is negatively correlated with wages. Arpaia and Pichelmann (2007) study (nominal and real) wage flexibility in the so-called EMU-12 countries between 1980 and2005, 4 finding that persistent differences in the evolution of labour costs and wage determination prevented the necessary adjustment.…”

Technical efficiency, unions and decentralized labor contracts

“…Felbermayr et al (2014) investigate the influence of export intensity on rent-sharing and find lower wages for firms more exposed to international trade, highlighting a lower unions' power, mainly due to the diminishing markups in foreign markets. Bronars and Deere (1991) argue that increasing the level of debt is a specific strategy pursued by managers to reduce the amount of profits potentially appropriable by employees, as well as the unions' bargaining power before negotiation.…”

Trade, Wages and Collective Bargaining: Evidence from France

“…We contribute to the burgeoning empirical literature on trade and wages, which has thus far mainly analysed the impact of exports and offshoring separately Hanson, 2003, Harrison et al, 2011 for surveys), and to a small literature focusing on the role of collective bargaining, notably Kramarz (2010) and Felbermayr et al (2014). We complement previous works by identifying the distinct effect of both trade activities in the same firm with instrumental variables, by unveiling heterogeneous responses across occupations and by using detailed data on bargaining regimes.…”