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Wage Cyclicality Under Different Regimes of Industrial Relations
Author(s) -
Gartner Hermann,
Schank Thorsten,
Schnabel Claus
Publication year - 2013
Publication title -
industrial relations: a journal of economy and society
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.61
H-Index - 57
eISSN - 1468-232X
pISSN - 0019-8676
DOI - 10.1111/irel.12022
Subject(s) - economics , unemployment , wage , wage bargaining , labour economics , collective bargaining , efficiency wage , wage growth , real wages , industrial relations , macroeconomics , management
We analyze the effect of collective wage agreements and of works councils on the cyclicality of real wages. Using employer–employee data for western Germany (1995–2004), we find that wage adjustments to positive and negative shocks are generally not symmetric. Wage growth increases in all industrial relations regimes when unemployment is falling, but this inverse relationship is weaker when unemployment is rising. Moreover, in plants with individual‐level bargaining, wages do not adjust at all to rising unemployment. Works councils increase wage growth only in firms covered by sectoral agreements, but they do not affect the cyclicality of wages.