Rent-sharing and Collective Bargaining Coverage: Evidence from Linked Employer–Employee Data

Authors

  • Nicole Guertzgen

    1. Centre for European Economic Research, D-68131 Mannheim, Germany
      Guertzgen@zew.de
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      I would like to thank Bernd Fitzenberger, Alfred Garloff, Julia Lane, Michael Maier, Friedhelm Pfeiffer and two anonymous referees for helpful comments. I am also grateful to the IAB, Nuremberg, and especially Peter Jacobebbinghaus for assistance with the data. Financial support from the German Science Foundation (Grant-No. PF 331/3-1/2) is gratefully acknowledged. The usual disclaimer applies.


Abstract

Using a linked employer–employee dataset, this paper analyses the relationship between firm profitability and wages. Particular emphasis is given to the question of whether the sensitivity of wages to firm-specific rents varies with collective bargaining coverage. To address this issue, we distinguish sector- and firm-specific wage agreements and wage determination without any bargaining coverage. Our findings indicate that individual wages are positively related to firm-specific quasi-rents in the non-union sector and under firm-specific contracts. Industry-wide wage contracts, however, are associated with a significantly lower responsiveness of wages to firm-level profitability.

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