Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany

43 Pages Posted: 23 May 2008

See all articles by Bernd Fitzenberger

Bernd Fitzenberger

Humboldt University of Berlin - School of Business and Economics

Karsten Kohn

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank; IZA Institute of Labor Economics

Alexander Lembcke

London School of Economics & Political Science (LSE)

Multiple version iconThere are 3 versions of this paper

Abstract

Collective bargaining in Germany takes place either at the sectoral level or at the firm level; collective bargaining coverage is much higher than union density; and not all employees in a covered firm are necessarily covered. This institutional setup suggests to distinguish explicitly between the effects of union power as measured by net union density (NUD) in a labor market segment, of coverage at the firm level, and of coverage at the individual level. Using linked employer-employee data and applying quantile regressions, this is the first empirical paper which simultaneously analyzes these three dimensions of union influence on the structure of wages. Ceteris paribus, a higher share of employees in a firm covered by industry-level or firm-level contracts is associated with higher wages. Yet individual bargaining coverage in a covered firm shows a negative impact both on the wage level and on wage dispersion. A higher union density reinforces the effects of coverage, but the effect of union density is negative at all points in the wage distribution for uncovered employees. In line with an insurance motive, higher union density compresses the wage structure and, at the same time, it is associated with a uniform leftward movement of the distribution for uncovered employees.

Keywords: union density, collective bargaining coverage, wage structure, quantile regression, linked employer-employee data, Structure of Earnings Survey 2001, Germany

JEL Classification: J31, J51, J52

Suggested Citation

Fitzenberger, Bernd and Kohn, Karsten and Lembcke, Alexander, Union Density and Varieties of Coverage: The Anatomy of Union Wage Effects in Germany. IZA Working Paper No. 3356, Available at SSRN: https://ssrn.com/abstract=1135932 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Bernd Fitzenberger (Contact Author)

Humboldt University of Berlin - School of Business and Economics ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

Karsten Kohn

Kreditanstalt für Wiederaufbau (KfW), KfW Development Bank ( email )

Palmengartenstr. 5-9
Frankfurt, 60325
Germany

IZA Institute of Labor Economics ( email )

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

Alexander Lembcke

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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

Paper statistics

Downloads
57
Abstract Views
884
rank
255,736
PlumX Metrics