Union Decline and the Coverage Wage Gap in Germany

John Addison, Paulino Teixeira, Jens Stephani () and Lutz Bellmann ()
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Jens Stephani: Institute for Employment Research (IAB), Nuremberg
Lutz Bellmann: Institute for Employment Research (IAB), Nuremberg

No 8257, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using linked employer-employee data, this paper estimates the effect of collective bargaining coverage on wages over an interval of continuing decline in unionism. Unobserved firm and worker heterogeneity is dealt with using two establishment sub-samples, comprising collective bargaining joiners and never members on the one hand and collective bargaining leavers and always members on the other, each in combination with subsets of worker job stayers. The counterfactuals are then reversed for robustness checks. Joining a sectoral agreement is found always to produce higher wages, while exiting a sectoral agreement no longer produces wage losses if the transition is to a firm agreement. Leaving a firm agreement to non-coverage also leads to wage reductions, while joining one from non-coverage seems decreasingly favourable. The reverse counterfactuals yield correspondingly smaller estimates (in absolute value) of wage development than reported for the initial counterfactuals. Finally, although small, the union wage gap persists.

Keywords: Germany; sectoral collective bargaining; firm-level agreements; wages; spell fixed-effects (search for similar items in EconPapers)
JEL-codes: J31 J51 J53 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2014-06
New Economics Papers: this item is included in nep-lab, nep-lma and nep-ltv
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Citations: View citations in EconPapers (2)

Published - published in: Journal of Labor Research, 2015, 36 (3), 301-317.

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