Wage Distributions by Bargaining Regime: Linked Employer-Employee Data Evidence from Germany

31 Pages Posted: 5 Jul 2007

See all articles by Karsten Kohn

Karsten Kohn

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

Alexander Lembcke

London School of Economics & Political Science (LSE)

Date Written: June 2007

Abstract

Using linked employer-employee data from the German Structure of Earnings Survey 2001, this paper provides a comprehensive picture of the wage structure in three wage-setting regimes prevalent in the German system of industrial relations. We analyze wage distributions for various labor market subgroups by means of kernel density estimation, variance decompositions, and individual and firm-level wage regressions. Unions' impact through collective and firm-level bargaining mainly works towards a higher wage level and reduced overall and residual wage dispersion. Yet observed effects are considerably heterogeneous across different labor market groups. There is no clear evidence for wage floors formed by collectively bargained low wage brackets which would operate as minimum wages for different groups of workers.

Keywords: collective wage bargaining, wage structure, kernel density estimation, variance decomposition, wage equations, German Structure of Earnings Survey

JEL Classification: J31, J51, J52

Suggested Citation

Kohn, Karsten and Lembcke, Alexander, Wage Distributions by Bargaining Regime: Linked Employer-Employee Data Evidence from Germany (June 2007). IZA Discussion Paper No. 2849, Available at SSRN: https://ssrn.com/abstract=998261

Karsten Kohn (Contact Author)

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

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