Abstract

We try to answer the following questions: Why are firms willing to accecpt collective wage agreements though there is no legal obligation to do so? How exert labour unions impacts on wage setting? Do unions affect training decisions of firms? We deal with these questions by developing a theoretical model of the interdependence of training decisions and union activity. The model is tested empirically using matched employer-employee panel data. The data set is created by combining the IAB establishment survey with the register data of the German Agency for Labour.