To Bind or Not to Bind Collectively? Decomposition of Bargained Wage Differences Using Counterfactual Distributions

Wolf Dieter Heinbach and Markus Spindler

No 36, IAW Discussion Papers from Institut für Angewandte Wirtschaftsforschung (IAW)

Abstract: Collective bargaining agreements still play an important role in the German wage setting system. Both existing theoretical and empirical studies find that collective bargaining leads to higher wages compared to individually agreed ones. However, the impact of collective bargaining on the wage level may be very different along the wage distribution. As unions aim at compressing the wage distribution, one might expect that for covered workers' wages in the lower part of the distribution workers' individual characteristics may be less important than the coverage by a collective contract. In contrast, the relative importance of workers' individual characteristics may rise in the upper part of the wage distribution, whereas the overall wage difference might decline. Using the newly available German Structure of Earnings Survey (GSES) 1995 and 2001, a cross-sectional linked employer-employee-dataset from German official statistics, this study analyses the difference between collectively and individually agreed wages using a Machado/Mata (2005) decomposition type technique.

Keywords: collective bargaining; wage structure; wage decomposition; quantile regression (search for similar items in EconPapers)
JEL-codes: C13 J31 J51 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2007-12
New Economics Papers: this item is included in nep-bec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Working Paper: To Bind or Not to Bind Collectively? Decomposition of Bargained Wage Differences Using Counterfactual Distributions (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:iaw:iawdip:36

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