Bargaining Regimes and Wage Dispersion

Collective wage contracts impose restrictions on wage-setting. We utilize German linked employer-employee data for blue-collar worker to compute the dispersion of wages and wage components within and across firms under three different wage-setting regimes: Establishments applying industry-wide colle...

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Bibliographic Details
Published in:Jahrbücher für Nationalökonomie und Statistik 2006-11, Vol.226 (6), p.629-645
Main Authors: Gerlach, Knut, Stephan, Gesine
Format: Article
Language:English
Subjects:
Analysis of variance
Blue collar workers
Collective bargaining
collective contracts
Contract negotiations
Contracts
Employees
establishment effects on wages
Germany
Human capital
Labor contracts
Labor economics
Labour relations
Manual labor
Rate setting
Sensitivity analysis
Size of enterprise
Standard deviation
Statistical analysis
Studies
Wage compression
Wage determination
Wage negotiations
Wage rates
Wage structure
Wages
Wages & salaries
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Summary:Collective wage contracts impose restrictions on wage-setting. We utilize German linked employer-employee data for blue-collar worker to compute the dispersion of wages and wage components within and across firms under three different wage-setting regimes: Establishments applying industry-wide collective contracts, establishments with firm-level contracts and uncovered establishments. The empirical analysis confirms a lower dispersion of wages and in particular "worker quality indices" for firms applying sectoral collective contracts compared to companies in the other two wage-setting regimes. Between the years 1990, 1995 and 2001 the dispersion of wages increases, and this is valid too for firms covered by industry-wide collective contracts. A sensitivity analysis demonstrates that the results retain their statistical significance and do not change qualitatively if we modify the minimum firm size (establishments with at least 50, 100 and 250 employees) or take into account the endogeneity of tenure or self-selection of workers into bargaining regimes.
ISSN:0021-4027
2366-049X
DOI:10.1515/jbnst-2006-0605