Industrial Relations and the Wage Differentials between Skilled and Unskilled Blue-Collar Workers within Establishments: An Empirical Analysis with Data of Manufacturing Firms

30 Pages Posted: 20 Nov 2000

See all articles by Olaf Hübler

Olaf Hübler

University of Hannover; IZA Institute of Labor Economics

Wolfgang Mayer

University of Cincinnati - McMicken College of Arts and Sciences - Department of Economics

Date Written: July 2000

Abstract

Increased wage inequality between skilled and unskilled workers is a stylized fact, which can be observed in many developed countries. Among the explanations advanced for this phenomenon is the increasing globalization, a skill-biased technical progress, restructuring of the firms, and last but not least, a decreasing importance of industrial relations institutions. In the paper, we investigate in a three-step procedure with firms' data whether the latter determinant is influential. We control for the other relevant explanations and split industrial relations into three components - coverage of collective bargaining, existence of a works council, and union density ? within a four-equation model. We find an insignificant influence of the union density. A Works council compresses the wage differentials between skilled and unskilled blue-collar workers while coverage is effective in the opposite direction. The latter two effects nearly offset each other.

JEL Classification: J31, J51

Suggested Citation

Hübler, Olaf and Mayer, Wolfgang, Industrial Relations and the Wage Differentials between Skilled and Unskilled Blue-Collar Workers within Establishments: An Empirical Analysis with Data of Manufacturing Firms (July 2000). IZA Discussion Paper No. 176. Available at SSRN: https://ssrn.com/abstract=250119

Olaf Hübler

University of Hannover ( email )

Institute of Quantitative Economic Research
D-30167 Hannover
Germany
+49 511 762 4794 (Phone)
+49 511 762 3923 (Fax)

IZA Institute of Labor Economics

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

Wolfgang Mayer (Contact Author)

University of Cincinnati - McMicken College of Arts and Sciences - Department of Economics ( email )

1202 Crosley
P.O. Box 210371
Cincinnati, OH 45221-0371
United States
513-556-2600 (Phone)
513-556-2669 (Fax)

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