Rent-Sharing and Collective Bargaining Coverage: Evidence from Linked Employer–Employee Data
27 Pages Posted: 29 Apr 2009
Date Written: 2008-12
Using a linked employer–employee dataset, this paper analyses the relationship between firm profitability and wages. Particular emphasis is given to the question of whether the sensitivity of wages to firm-specific rents varies with collective bargaining coverage. To address this issue, we distinguish sector- and firm-specific wage agreements and wage determination without any bargaining coverage. Our findings indicate that individual wages are positively related to firm-specific quasi-rents in the non-union sector and under firm-specific contracts. Industry-wide wage contracts, however, are associated with a significantly lower responsiveness of wages to firm-level profitability.
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By Gábor Kátay