Opposite Effects of Competition and Rents on Collective Bargaining – Evidence from Germany

Finn Martensen

No 2014-15, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: Why do firms and workers bargain individually or collectively? I test the effect of product market competition and rents with German establishment data. Against intuition, competition and rents have opposite effects. Competition has a u-shaped effect on the probability of collective bargaining. This contradicts the existing theory (Ebell and Haefke 2006; Boeri and Burda 2009). By contrast, firms with higher rents are more prone to collective bargaining. For both competition and rents, the effect is stronger for sector-level than for firm-level collective bargaining. Indicators of higher productivity also matter: A higher export share drives firms into individual wage bargaining, while a higher share of workers with higher education drives firms into firm-level bargaining. Thus, the interplay between productivity, competition, and the wage setting regime is much more subtle than suggested by the existing theory.

Keywords: Collective bargaining; Wage determinations; Productivity; Product market competition; Establishment data (search for similar items in EconPapers)
JEL-codes: C25 J24 J52 J64 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-11-10
New Economics Papers: this item is included in nep-bec, nep-com and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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