Organised Labour, Labour Market Imperfections, and Employer Wage Premia

Arbeitspapier

This paper examines how collective bargaining through unions and workplace codetermination through works councils shape labour market imperfections and how labour market imperfections matter for employer wage premia. Based on representative German plant data for the years 1999-2016, we document that labour market imperfections are the norm rather than the exception. Wage mark-downs, that is wages below the marginal revenue product of labour rooted in employers' monopsony power, are the most prevalent outcome. We further find that both types of organised labour are accompanied by a smaller prevalence and intensity of wage mark-downs whereas the opposite holds for wage mark-ups, that is wages above the marginal revenue product of labour rooted in workers' monopoly power. Finally, we document a close link between our production-based labour market imperfection measures and employer wage premia. The prevalence and intensity of wage mark-downs are associated with a smaller level and larger dispersion of premia whereas wage mark-ups are only accompanied by a higher premium level.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 13909

Classification and Topics

• Classification: Wirtschaft ; Monopsony; Segmented Labor Markets ; Labor-Management Relations, Trade Unions, and Collective Bargaining: General ; Wage Level and Structure; Wage Differentials ; Firm Behavior: Empirical Analysis
• Subject: wage mark-downs ; wage mark-ups ; collective wage agreements ; works councils ; employer wage premia

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dobbelaere, Sabien ; Hirsch, Boris ; Müller, Steffen ; Neuschaeffer, Georg
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/232661
• Last update: 10.03.2025, 11:43 AM CET