The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?

37 Pages Posted: 20 May 2018

See all articles by Tobias Brändle

Tobias Brändle

University of Tuebingen; Institute for Applied Economic Research (IAW)

Laszlo Goerke

University of Trier - Institute of Labour Law and Industrial Relations in the European Union; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Abstract

A large number of articles have analysed 'the one constant' in the economic effects of trade unions, namely that collective bargaining reduces employment growth by two to four percentage points per year. Evidence is, however, mostly related to Anglo-Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked-employer-employee data for Germany, we find a negative correlation between being covered by a sector-wide bargaining agreement or firm-level contract and employment growth of about one percentage point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross-section data might be driven by selection.

Keywords: collective bargaining, employment growth, job flows, trade unions

JEL Classification: J23, J52, J53, J63

Suggested Citation

Brändle, Tobias and Goerke, Laszlo, The One Constant: A Causal Effect of Collective Bargaining on Employment Growth?. IZA Discussion Paper No. 11518, Available at SSRN: https://ssrn.com/abstract=3181110

Tobias Brändle (Contact Author)

University of Tuebingen ( email )

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Tuebingen, 72074
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Institute for Applied Economic Research (IAW) ( email )

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Laszlo Goerke

University of Trier - Institute of Labour Law and Industrial Relations in the European Union ( email )

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Trier, 54296
Germany

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