Abstract

Using a large linked employer-employee data set, this project studies
whether the existence and use of flexibility provisions within centralised collective
wage agreements alters the structure of pay across employers. Using level regressions
and first difference methods, we find that - compared with contracts without any
flexibility - wages under opt-out clauses are more responsive to local profitability
conditions in below-average performing establishments. In contrast, the sensitivity
of wages to local profitability is smaller in high-performance establishments. Our
results provide further evidence for a threat potential of the existence of opt-out
clauses whose impact on flexibility is larger than the real application.