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Rent-sharing and collective wage contracts - evidence from German establishment-level data

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Guertzgen, Nicole

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Abstract Using German establishment-level data, this paper analyses whether wages respond to firm-specific profitability conditions. Particular emphasis is given to the question of whether the extent of rent-sharing varies with collective bargaining coverage. In this context, two conflicting hypotheses are tested. The first one asserts that unions exploit their bargaining power at the firm-level and appropriate a larger share of rents than the bargaining parties in uncovered firms. The second one states that unions favour a compressed intra-industry wage structure and suppress the responsiveness of wages to firm-specific profitability conditions.\ The empirical analysis provides strong support for the second hypothesis. While pooled OLS estimates yield positive estimates of the rent-sharing coefficient in covered establishments, dynamic panel data estimates accounting for unobserved heterogeneity and the endogeneity of rents point to a rent-sharing coefficient of zero.
Classification Income Policy, Property Policy, Wage Policy
Document language English
Publication Year 2009
Page/Pages p. 2835-2854
Journal Applied Economics, 42 (2009) 22
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)