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The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data
Author(s) -
Brändle Tobias,
Goerke Laszlo
Publication year - 2018
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/sjpe.12180
Subject(s) - collective bargaining , german , economics , panel data , constant (computer programming) , labour economics , point (geometry) , outcome (game theory) , west germany , econometrics , microeconomics , geometry , mathematics , archaeology , computer science , history , programming language , economic history
A large number of articles have analysed ‘the one constant’ in the economic effects of trade unions, namely that collective bargaining reduces employment growth by 2–4% points per year. Evidence is, however, mostly related to Anglo‐Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked‐employer‐employee data for Germany, we find a negative correlation between being covered by a sector‐wide bargaining agreement or firm‐level contract and employment growth of about 1% point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross‐section data might be driven by selection.