Kiel Working Papers, Kiel Institute for World Economics
No 1654:
Wage cyclicality under different regimes of industrial relations
Hermann Gartner, Thorsten Schenk and Claus Schnabel
Abstract: Since there is scant evidence on the role of industrial
relations in wage cyclicality, this paper analyzes the effect of collective
wage contracts and of works councils on real wage growth. Using linked
employer-employee data for western Germany, we find that works councils
affect wage growth only in combination with collective bargaining. Wage
adjustments to positive and negative economic shocks are not always
symmetric. Only under sectoral bargaining there is a (nearly symmetric)
reaction to rising and falling unemployment. In contrast, wage growth in
establishments without collective bargaining adjusts only to falling
unemployment and is unaffected by rising unemployment
Keywords: wage cyclicality, wage bargaining, works council, Germany; (follow links to similar papers)
JEL-Codes: J31,; E32,; J53; (follow links to similar papers)
29 pages, October 2010
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