Paying more than necessary? The wage cushion in Germany

Arbeitspapier

Using a representative establishment data set for Germany, we show that more than 40 percent of plants covered by collective agreements pay wages above the level stipulated in the agreement, which gives rise to a wage cushion between the levels of actual and contractual wages. Cross-sectional and fixed-effects estimations for the period 2001-2006 indicate that the wage cushion mainly varies with the profit situation of the plant and with indicators of labour shortage and the business cycle. While plants bound by multi-employer sectoral agreements seem to pay wage premiums in order to overcome the restrictions imposed by the rather centralized system of collective bargaining in Germany, plants which make use of single-employer agreements are significantly less likely to have wage cushions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4278

Classification and Topics

• Classification: Wirtschaft ; Wages, Compensation, and Labor Costs: General ; Wage Level and Structure; Wage Differentials
• Subject: Wages ; wage cushion ; wage determination ; bargaining ; Germany ; Lohnbildung ; Tarifpolitik ; Lohnverhandlungen ; Tariflohn ; Lohnstruktur ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jung, Sven ; Schnabel, Claus
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35527
• URN: urn:nbn:de:101:1-2009082109
• Last update: 10.03.2025, 11:43 AM CET