Rent-Sharing: Does the Bargaining Regime Make a Difference? Theory and Empirical Evidence

40 Pages Posted: 8 Apr 2005 Last revised: 18 Aug 2008

See all articles by Nicole Gürtzgen

Nicole Gürtzgen

ZEW – Leibniz Centre for European Economic Research

Date Written: 2005

Abstract

This paper analyses whether wages in Germany respond to firm-specific profitability conditions. Particular emphasis lies on the question of whether the extent of rent-sharing varies across different systems of wage determination. Those may be categorised into sector-specific wage agreements, firm-specific wage agreements and wage determination without any bargaining coverage. To derive testable hypotheses, we set up a theoretical model that analyses the sensitivity of wages to firm-specific conditions under different wage setting structures. The hypotheses are tested using an establishment-level panel data set from the mining and manufacturing sector. The results of the empirical analysis generally suggest that rent-sharing is present in Germany. However, the extent of rent-sharing is found to be significantly lower in establishments that are subject to a collective wage agreement - irrespective of whether the agreement is industry- or firm-specific. While pooled OLS estimates yield positive estimates of the rent-sharing coefficient in establishments that are covered by a collective contract, SYS-GMM-estimates accounting for unobserved heterogeneity and endogeneity of rents point to a rent-sharing coefficient of zero.

Keywords: Rent-Sharing, Wage-Setting Structure, Unions, Panel Data

JEL Classification: J31, J51, C23

Suggested Citation

Guertzgen, Nicole, Rent-Sharing: Does the Bargaining Regime Make a Difference? Theory and Empirical Evidence (2005). ZEW - Centre for European Economic Research Discussion Paper No. 05-015, Available at SSRN: https://ssrn.com/abstract=686721 or http://dx.doi.org/10.2139/ssrn.686721

Nicole Guertzgen (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
63
Abstract Views
948
rank
417,323
PlumX Metrics