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We Want Them All Covered! Collective Bargaining and Firm Heterogeneity: Theory and Evidence from Germany
Author(s) -
Baumann Florian,
Brändle Tobias
Publication year - 2017
Publication title -
british journal of industrial relations
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.665
H-Index - 70
eISSN - 1467-8543
pISSN - 0007-1080
DOI - 10.1111/bjir.12239
Subject(s) - stylized fact , collective bargaining , productivity , economics , wage , oligopoly , structural estimation , german , panel data , microeconomics , dispersion (optics) , microfoundations , wage dispersion , labour economics , empirical evidence , bargaining power , econometrics , efficiency wage , macroeconomics , history , physics , archaeology , cournot competition , optics , philosophy , epistemology
This article establishes a link between the degree of productivity dispersion within an industry and collective bargaining coverage of the firms in the industry. In a stylized unionized oligopoly model, we show that differences in productivity levels can affect the design of collective wage contracts a sector‐union offers to heterogeneous firms. Using German linked employer–employee data, we test a range of our theoretical hypotheses and find empirical support for them. The dispersion of sector‐level labour productivity decreases the likelihood of firms being covered by a collective bargaining agreement on the industry level, but increases the likelihood of firms being covered by firm‐level agreements. The results hold for different subsamples and (panel) estimation techniques.