Collective Bargaining Networks and the Propagation of Shocks

Santiago Hermo

No 25157, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: How does collective bargaining shape the labor market response to economic shocks? I use novel Argentine administrative data to uncover the network of firms linked by collective bargaining and show that positive product-demand shocks to firms within a bargaining unit raise wages at other non-shocked firms in the same unit. Heterogeneous wage and employment responses indicate that propagation operates via collectively bargained wage floors. I develop and estimate a structural model where wage floors are determined in bargaining equilibrium. The model shows that the network shapes the bite of wage floors, which in turn determines the magnitude of shock propagation.

Keywords: collective bargaining; unions; wage floors; monopsony power; trade shocks; shock propagation; rent-sharing (search for similar items in EconPapers)
JEL-codes: F16 J42 J51 J52 (search for similar items in EconPapers)
Date: 2025-12
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