Indicative and Updated Estimates of the Collective Bargaining Premium in Germany

42 Pages Posted: 6 Jul 2013

See all articles by John T. Addison

John T. Addison

University of South Carolina - Moore School of Business - Department of Economics; IZA Institute of Labor Economics

Paulino Teixeira

Universidade de Coimbra - Faculdade de Economia; Center for European Economic Research (ZEW)

Katalin Evers

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Lutz Bellmann

Institute for Employment Research (IAB); Institute for the Study of Labor (IZA)

Multiple version iconThere are 2 versions of this paper

Abstract

This study provides updated evidence on the union contract differential in Germany using establishment-wide wage data and two estimation strategies. It provides pairwise estimates of the union differential based on separate samples of collective bargaining leavers and joiners vis-à-vis the corresponding counterfactual groups. It is reported that average wages increase by 3 to 3.5 percent after entering into a collective agreement and decrease by 3 to 4 percent after abandoning a collective agreement. Excluding establishments that experience mass layoffs little influences these net findings, although such establishments record wage losses – statistically insignificant for joiners but up to 10 percent in the case of leavers, as compared with the counterfactuals. The backdrop to these new indicative estimates, which are properly conditioned on establishment size and industry affiliation, inter al., is one of wage stagnation and continuing union decline.

Keywords: average wages, union contract premium, collective bargaining transitions, difference-in-differences, matching, Germany

JEL Classification: J31, J51

Suggested Citation

Addison, John T. and Teixeira, Paulino and Evers, Katalin and Bellmann, Lutz, Indicative and Updated Estimates of the Collective Bargaining Premium in Germany. IZA Discussion Paper No. 7474. Available at SSRN: https://ssrn.com/abstract=2290472

John T. Addison (Contact Author)

University of South Carolina - Moore School of Business - Department of Economics ( email )

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HOME PAGE: http://mooreschool.sc.edu/moore/economics/profiles/addison.htm

IZA Institute of Labor Economics

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Paulino Teixeira

Universidade de Coimbra - Faculdade de Economia ( email )

Av. Dias da Silva, 165
Coimbra, 3004-512
Portugal

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
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Katalin Evers

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Lutz Bellmann

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany
+49 911 179 3046 (Phone)
+49 911 179 3297 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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