Wage insurance within German firms: do institutions matter?

Nicole Guertzgen ()

No 09-043, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Using a large linked employer-employee data set, this paper studies the extent to which employers insure workers against transitory and permanent firm-level shocks. Particular emphasis is given to the question of whether the amount of wage insurance depends on the nature of industrial relations. Adopting the identification strategy proposed by Guiso et al. (2005), it is shown that wage insurance is particularly apparent for individuals subject to collective wage agreements. While collective contracts alone are sufficient to fully insure workers against transitory shocks in small plants, they provide only partial insurance in medium-sized and large plants. At large employers, the joint existence of collective contracts and works councils helps to provide full insurance against transitory shocks, but provides only partial insurance against permanent shocks. This finding is consistent with the amount of insurance against permanent shocks being constrained by the possibility of considerable job losses and bankruptcy.

Keywords: Wage insurance; linked employer-employee data; collective bargaining (search for similar items in EconPapers)
JEL-codes: J31 J51 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-bec, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Wage insurance within German firms: do institutions matter? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:09043

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