Collective contracts, wages and wage dispersion in a multi-level model

"The authors use German linked employer-employee data for the years 1990, 1995 and 2001 to analyze, which dimensions of wage setting differ across three wage-setting regimes: Establishments applying sectoral collective contracts, establishments with firm-level contracts and uncovered establishments. The empirical analysis is restricted to workers without supervisory functions in larger manufacturing firms and shows that for this group of workers base wages are higher in firms applying collective contracts, while returns to human capital and the gender wage gap are reduced. Moreover, during the nineties these effects have become stronger." (Author's abstract, IAB-Doku) ((en))Tarifvertrag, Lohnstruktur, Lohnfindung, Flächentarifvertrag, Firmentarifvertrag, Tariflohn, Lohnhöhe, geschlechtsspezifische Faktoren

Employment Adjustments on the Internal and External Labour Market: An Empirical Study with Personnel Records of a German Company

Firms are affected by the product demand. This leads to employment adjustments. In the literature we find only very few contributions investigating the issue whether internal adjustments are linked and which relationships exist with external adjustments. Are they of a complementary or substitutive nature? Furthermore, it is of interest to find out, whether we can observe an obvious trend and whether the adjustments are driven by cyclical movements. For this study we have an extensive data set of a large German manufacturing company, which supplies innovative products for the domestic and international market, provided on a monthly base from January 1999 to December 2005. The empirical analysis starts with descriptive statistics. We find that the employment adjustment cycle coincides only to a certain degree with the macroeconomic cycle. Internal and external adjustments are more characterized by complementarity than by substitution. Over the observed period we cannot detect analogous wage adjustments. It is noticeable that in 2003 compared with the years before the number of employees is substantially reduced. The econometric investigation is based on a two-stage approach. We start with a bivariate probit estimation in order to extract the relationship between the probability of overtime and of promotion. Unobserved variables have opposite effects on the former and the latter adjustment instrument. Furthermore, we detect a negative trend of internal employment adjustments. Cyclical effects are ambiguous. The next step, the determination of external adjustments with respect to overtime and promotion adjustments, is split into two estimates. On the one hand we do not distinguish between the type of external employment adjustment and on the other hand we use this information separating between quits, layoffs, workers with a cancellation agreement and with a transition into a transfer organisation. The first approach demonstrates that a promotion reduces the probability to leave the firm while overtime is positively associated with an external job change. This pattern holds generally speaking in the second, more detailed estimates. Quits are the exception. In this case we observe opposite effects. Finally, we cannot detect any influences of promotions on cancellation agreements. --Personnel records,overtime,promotion,job mobility,cancellation agreement,transfer organisation

Individual tenure and collective contracts

"The paper analyses the relationship between individual tenure and the application of collective contracts at the firm level, using a multi-level model and a German linked employer-employee data set for the years 1990, 1995 and 2001. The main result is that elapsed tenure is longer in firms applying collective contracts than in companies with individual wage-setting. Thus workers in firms with collective contracts benefit not only from higher wages, but also from higher job stability. Furthermore, we find no significant changes in mean tenure during the nineties as well as stable differences across wage-setting regimes." (Author's abstract, IAB-Doku) ((en))Betriebszugehörigkeit - Dauer, Firmentarifvertrag, Tarifbindung, Arbeitsplatzsicherheit, Lohnhöhe

Wage distributions by wage-setting regime

"Collective wage contracts impose restrictions on wage-setting. We utilize German linked employer-employee data for blue-collar worker to compute the dispersion of wages and wage components within and across firms under three different wage-setting regimes: Establishments applying sectoral collective contracts, establishments with firm-level contracts and uncovered establishments. The empirical analysis confirms a lower dispersion of wages and wage components for firms applying sectoral collective contracts compared to companies in the other two wage-setting regimes. Implications for policy are discussed." (Author's abstract, IAB-Doku) ((en))Lohnstruktur, Tarifvertrag, Firmentarifvertrag, Tarifbindung

Autonomous Wage Inflation

This paper develops a theory of stagflation, based on turnover-efficiency-wage theory. In these theories, wages are forward-looking, i.e., set to keep incumbents with the firm. The employed workers apply for better jobs and compete with unemployed applicants. An employed applicant is, however, preferred to an unemployed applicant, or the long-term unemployed, who, with their outdated skills, form an essentially non-competing group. Consider now the case that the monetary authority succeeds in stabilizing the price level permanently. Start from efficiency-wage unemployment equilibrium. The skills of the unemployed will, after a while, become outdated. This reduces the „effective” rate of unemployment and causes the labor market to tighten. Turnover increases, and the former equilibrium is destroyed. The individual firm will raise wages in order to reduce turnover costs. Costs increase, causing prices to also increase. The monetary authority reacts with restrictive policies, and unemployment increases. This leads to a new turnover-efficiency-wage equilibrium, and the process continues. The argument implies that wage inflation emerges after a while at all employment levels. This paper concludes by discussing some of the consequent policy implications

Einige Anmerkungen zur Lohnkurve

Der Autor faßt die Tagungsbeiträge und die Ergebnisse eines Workshops des IAB zur Lohnkurve kurz zusammen. Die Tagungsbeiträge sind in dem Heft ebenfalls abgedruckt. Im Anschluß folgen Literaturhinweise zum Themenschwerpunkt. (IAB)Lohnkurve, Lohnhöhe, Arbeitslosigkeit, regionaler Arbeitsmarkt

Wirtschafts- und arbeitsmarktpolitische Schlußfolgerungen für Deutschland : ein Resümee der Diskussionsbeiträge (Conclusions for Germany concerning economic and labour market policy : a summary of the discussion contribution)

"The discussion contributions for the workshop 'Strategies for more employment - international experiences' were judged differently by the representatives of trade unions, employers and central and local government who participated. There was some consensus, or at least partial agreement, as to the feasibility and possibility of applying the experiences gathered there to Germany. With certain subjects (such as that of wage differentiation), however, problems came to light that were accentuated differently during the discussion. This summary of the event attempts to make clear these approving and critical assessments. Taking up one or other of the discussion contributions, some further considerations concerning future prospects are mentioned." (Author's abstract, IAB-Doku) ((en))Arbeitslosigkeitsbekämpfung, Arbeitszeitpolitik, Lohndifferenzierung, Beschäftigungspolitik

Employment adjustments on the internal and external labour market : an empirical study with personnel records of a German company

Firms are affected by the product demand. This leads to employment adjustments. In the literature we find only very few contributions investigating the issue whether internal adjustments are linked and which relationships exist with external adjustments. Are they of a complementary or substitutive nature? Furthermore, it is of interest to find out, whether we can observe an obvious trend and whether the adjustments are driven by cyclical movements. For this study we have an extensive data set of a large German manufacturing company, which supplies innovative products for the domestic and international market, provided on a monthly base from January 1999 to December 2005. The empirical analysis starts with descriptive statistics. We find that the employment adjustment cycle coincides only to a certain degree with the macroeconomic cycle. Internal and external adjustments are more characterized by complementarity than by substitution. Over the observed period we cannot detect analogous wage adjustments. It is noticeable that in 2003 compared with the years before the number of employees is substantially reduced. The econometric investigation is based on a two-stage approach. We start with a bivariate probit estimation in order to extract the relationship between the probability of overtime and of promotion. Unobserved variables have opposite effects on the former and the latter adjustment instrument. Furthermore, we detect a negative trend of internal employment adjustments. Cyclical effects are ambiguous. The next step, the determination of external adjustments with respect to overtime and promotion adjustments, is split into two estimates. On the one hand we do not distinguish between the type of external employment adjustment and on the other hand we use this information separating between quits, layoffs, workers with a cancellation agreement and with a transition into a transfer organisation. The first approach demonstrates that a promotion reduces the probability to leave the firm while overtime is positively associated with an external job change. This pattern holds generally speaking in the second, more detailed estimates. Quits are the exception. In this case we observe opposite effects. Finally, we cannot detect any influences of promotions on cancellation agreements

The acceptability of layoffs and pay cuts : comparing North America with Germany

"Substantial evidence shows that North Americans are generally more accepting of the market than Europeans and attribute market outcomes to a larger degree to effort or skill. This article discusses the perceived fairness of layoffs and pay cuts in North America and Germany. We expect North Americans to be more accepting of layoffs and pay cuts than Germans and that procedures and conditions under which pay cuts or layoffs occur have a stronger impact on fairness perceptions for Germans than for North Americans. This hypothesis is tested using a quasi-experimental design. The empirical results are in line with our considerations." (Author's abstract, IAB-Doku) ((en))Entlassungen - Akzeptanz, Lohnsenkung - Akzeptanz, institutionelle Faktoren, gesellschaftliche Einstellungen, Gerechtigkeit, soziale Wahrnehmung - internationaler Vergleich, Einkommensunterschied, psychische Faktoren, Arbeitsbeziehungen, soziale Normen, soziale Einstellungen, USA, Bundesrepublik Deutschland, Kanada, Nordamerika, Silicon Valley, Toronto

Wage distributions by wage-setting regime

"Collective wage contracts impose restrictions on wage-setting. We utilize German linked employer-employee data for blue-collar worker to compute the dispersion of wages and wage components within and across firms under three different wage-setting regimes: Establishments applying sectoral collective contracts, establishments with firm-level contracts and uncovered establishments. The empirical analysis confirms a lower dispersion of wages and wage components for firms applying sectoral collective contracts compared to companies in the other two wage-setting regimes. Implications for policy are discussed." (author's abstract)Ausgehend von der These, dass Tarifverträge die Lohnfindung einschränken, untersuchen die Autoren anhand von Linked-Employer-Employee-Daten für gewerbliche Arbeitskräfte die Lohnspreizung bei drei unterschiedlichen Lohnfindungsverfahren: Firmen mit Branchentarifvertrag, solche mit Werktarifvertrag sowie Firmen ohne Tarifbindung. Die empirische Analyse ergibt, dass bei Firmen mit Branchentarifverträgen eine niedrigere Lohnspreizung auftritt als bei den anderen beiden Typen. (IAB