Do industry-level contracts suppress firm wage differentials?

Abstract

"This article studies the role of collective bargaining coverage for the relationship between wages and firm-specific performance. The empirical evidence based upon German linked employer-employee data provides support for the hypothesis that industry-level contracts suppress firm wage differentials that arise from firm-specific profitability conditions. Addressing the role of the frequency of shocks to firm performance, the evidence further suggests that the insensitivity of wages to firm-specific productivity fluctuations is mainly driven by the insulation of wages from transitory shocks. For permanent shocks, however, the evidence points to somewhat more flexible wages as - at least at large employers - wages are found to significantly respond to permanent productivity fluctuations. As to the role of firm heterogeneity in a given industry, the empirical results also show that under industry-level bargaining workers in more heterogeneous sectors receive lower wages than workers in more homogeneous sectors. This may be interpreted as evidence that centralised unions internalise negative implications of a compressed industry wage structure for below-average performing firms." (Author's abstract, IAB-Doku) ((en))

Cite article

Gürtzgen, N. (2011): Behindern Flächentarifverträge eine betriebliche Differenzierung der Entlohnung? In: Zeitschrift für ArbeitsmarktForschung, Vol. 44, No. 1/2, p. 155-161. DOI:10.1007/s12651-011-0055-9