Rent-sharing and collective wage contracts–evidence from German establishment-level data

Guertzgen, Nicole

doi:10.1080/00036840801964708

Cited by 24 publications

(28 citation statements)

References 30 publications

(30 reference statements)

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“…In my own recent work, I use data from the IAB Establishment Panel and find wages to be positively related to establishment profits. However, this appears to be true only for uncovered establishments, since I fail to detect any positive relationship between wages and local profitability conditions in plants that are subject to a collective wage agreement—irrespective of whether the agreement is industry‐ or firm‐specific; see Guertzgen (2005). While aggregate firm‐level data provide a valuable data source for exploring the implications of collective bargaining coverage on rent‐sharing, the results are still subject to several limitations.…”

Section: Introductionmentioning

confidence: 85%

“…For example, one might suspect that, if centralised contracts shelter firms against excessive rent‐sharing at the firm level, highly profitable firms might systematically select themselves into the centralised regime. In an earlier paper based on the establishment‐level data (Guertzgen, 2005), I have demonstrated that the overall pattern of rent‐sharing across the three regimes is robust to the endogeneity of the bargaining regime.…”

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confidence: 94%

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Rent‐sharing and Collective Bargaining Coverage: Evidence from Linked Employer–Employee Data

Guertzgen¹

2009

Scandinavian J Economics

143

138

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Using a linked employer-employee data set, this paper analyses the relationship between …rm-pro…tability and wages. Particular emphasis is given to the question of whether the sensitivity of wages to …rm-speci…c rents varies with collective bargaining coverage. To address this issue, we distinguish sectorspeci…c wage agreements, …rm-speci…c wage agreements and wage determination without any bargaining coverage. Our …ndings indicate that individual wages are positively related to …rm-speci…c rents in the non-union sector and under …rm-speci…c contracts. Industry-wide wage contracts, however, seem to suppress …rm-level rent-sharing. While pooled OLS estimates yield a positive correlation between wages and quasi-rents under centralised contracts, estimates accounting for unobserved individual and establishment heterogeneity point to a coe¢ cient of zero. Di¤erenced GMM estimates accounting for the endogeneity of our pro…tability measure even point to a negative relationship under centralised contracts. Non-technical summary: This paper analyses whether wages in Germany respond to …rm-speci…c pro…tability conditions. Particular emphasis is given to the question of whether the sensitivity of wages to …rm-speci…c rents varies with collective bargaining coverage. To address this issue, we distinguish sector-speci…c wage agreements, …rm-speci…c wage agreements and wage determination without any bargaining coverage. Theoretical considerations lead us to expect the sensitivity of wages to …rm-speci…c rents to be larger under …rm-speci…c contracts than in non-covered …rms. The same is likely to hold for industry-wide agreements, provided the bargaining parties make use of ‡exibility provisions, which recently have become a widespread element of central wage agreements. Since direct information on the use of ‡exibility provisions in …rms subject to an industry-wide wage agreement is unavailable, we take our empirical …ndings as an indirect test of whether the use of such provisions is a quantitatively important phenomenon in Germany.Using linked employer-employee data from the mining and manufacturing sector, our empirical analysis o¤ers a remarkably consistent picture: Individual wages are positively related to …rm-speci…c quasi-rents, but this appears to be con…ned to the non-union sector and to …rm-speci…c contracts. Industry-wide wage agreements, in contrast, appear to suppress rent-sharing at the …rm level. While pooled OLS estimates yield a positive correlation between wages and quasi-rents under centralised contracts, estimates accounting for unobserved individual and establishment heterogeneity point to a coe¢ cient of zero. Di¤erenced GMM estimates accounting for the endogeneity of our pro…tability measure even point to a negative relationship between wages and …rm-speci…c pro…tability under centralised contracts. Although this result is di¢ cult to interpret, it leads us to conclude that the lower responsiveness of wages to …rm-speci…c conditions under centralised contracts is not simply due to a downward-...

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Section: Introductionmentioning

confidence: 85%

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confidence: 94%

Rent‐sharing and Collective Bargaining Coverage: Evidence from Linked Employer–Employee Data

Guertzgen¹

2009

Scandinavian J Economics

143

138

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“…This approach is comparable to Gürtzgen () for collective bargaining coverage and Jirjahn () for works council existence. Yet, Table A3 shows that both variables are significant determinants of wages and productivity.…”

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confidence: 84%

Flexible collective bargaining agreements: Still a moderating effect on works council behaviour?

Brändle

2017

Manage Decis Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Analysing institutional changes and augmenting a theoretical model provides hypotheses, which are then tested using empirical analysis of representative German plant level data. We find that the existence of flexibility provisions in collective bargaining agreements do not drive works council behaviour towards rent-seeking. Terms of use: Documents inRegarding rent-generation, we find an amplifying effect: works council existence is associated with higher productivity in plants covered by industry-level contracts.These findings, however, depend on the level of collective bargaining: they do not hold in plants covered by firm-level contracts.

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“…Further, econometric research suggests that wages are higher under works councils (e.g. Addison, Teixeira, and Zwick, 2010;Gürtzgen, 2010). In short, the separation of distribution from production issues in the German system is inevitably partial.…”

Section: Erosionmentioning

confidence: 99%

The demise of a model? The state of collective bargaining and worker representation in Germany

Addison

Teixeira

Pahnke

et al. 2014

Economic and Industrial Democracy

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The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. This article investigates collective bargaining trends in the German private sector since 2000. Using data from the IAB Establishment Panel and the German Establishment History Panel, it provides both cross sectional and longitudinal evidence on these developments. It confirms that the hemorrhaging of sectoral bargaining, first observed in the 1980s and 1990s, is ongoing. Furthermore, works councils are also in decline, so that the dual system also displays erosion. For their part, any increases in collective bargaining at firm-level have been minimal in recent years, while the behavior of newly-founded and closing establishments does not seem to lie at the root of a burgeoning collective bargaining free sector. Although there are few obvious signs of an organic reversal of the process, some revitalization of the bargaining system from above is implied by the labor policies of the new coalition government.

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Rent-sharing and collective wage contracts–evidence from German establishment-level data

Cited by 24 publications

References 30 publications

Rent‐sharing and Collective Bargaining Coverage: Evidence from Linked Employer–Employee Data

Rent‐sharing and Collective Bargaining Coverage: Evidence from Linked Employer–Employee Data

Flexible collective bargaining agreements: Still a moderating effect on works council behaviour?

The demise of a model? The state of collective bargaining and worker representation in Germany

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