Firms' Rents, Workers' Bargaining Power and the Union Wage Premium

37 Pages Posted: 19 Jan 2016

Date Written: December 2015

Abstract

This article identifies the wage premium associated with firm‐level union recognition in France. An average premium of 2% is found despite the fact that most workers are already covered by industry‐level agreements. To explore the origin of the premium, I construct a simple bargaining model from which I derive three predictions, which are tested empirically using matched employer–employee data. The main prediction is that if intra‐firm bargaining is behind the union wage premium, the latter increases with the amount of quasi‐rents available in the firms that unions organise. This prediction is validated empirically when firms' market shares are used as a proxy for their rents.

Suggested Citation

Breda, Thomas, Firms' Rents, Workers' Bargaining Power and the Union Wage Premium (December 2015). The Economic Journal, Vol. 125, Issue 589, pp. 1616-1652, 2015. Available at SSRN: https://ssrn.com/abstract=2716798 or http://dx.doi.org/10.1111/ecoj.12198

Thomas Breda (Contact Author)

Banque de France ( email )

Paris
France

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