Employment effects of centralization in wage setting in a median voter model

"Most models on centralization in wage setting rest on the assumption of identical firms. This stands in sharp contrast to informal statements against centralization wich rest on the argument that firms are heterogenous and that equal treatment of firms by unions must therefore be ineffcient. We analyse one aspect of this debate in the framework of a median voter model with heterogenous firms but we don't find unique negative employment effects. It may be cumbersome or even impossible to check whether the conditions for unique effects are met. Explorative investigations of the magnitude of the implied effects show however, that they are noteworthy only if differences between firms are large." (Author's abstract, IAB-Doku) ((en))Lohntheorie, Arbeitsmarkttheorie, Lohnfindung, Zentralisierung, Beschäftigungseffekte, Tarifverhandlungen - Effizienz, Gewerkschaft

Comment on: "Centralized Bargaining and Reorganized Work: Are they Compatible?"

Assar Lindbeck and Denis Snower investigate the effects of multitasking and teamwork on the viability of centralised bargaining. They emphasize that workers likely have private information concerning their task mix when multitasking plays a significant role in the production process. They try to show in a formal model that only a complex remuneration scheme provides incentives for workers to choose an optimal task mix and suggest that centralized wage setting cannot tackle this complexity. We show that their remuneraton scheme is either not necessary to solve the considered information problem or not implementable.reorganization, holistic firms, centralized bargaining, incentive payment

Wage cyclicality and the wage curve under the microscope

"Using large data sets from the German employment and unemployment register 1985-2004, we investigate aggregate wage cyclicality and the wage curve for establishment stayers and movers. We find that movers' wage responses to aggregate unemployment rate changes exceed these of stayers by about 30-40 percent. A new finding is that the increments of movers over stayer responses to regional unemployment shocks are considerably greater and amount to about 150 percent. This difference in differences (responses to regional compared with aggregate cycles and responses of movers compared with stayers) can be explained by the importance of centralized wage bargaining in Germany." (Author's abstract, IAB-Doku) ((en))IAB-Beschäftigtenstichprobe, Lohnentwicklung, Lohnkurve, zwischenbetriebliche Mobilität, Arbeitskräftemobilität, Arbeitskräfte, Arbeitslosenquote, regionaler Arbeitsmarkt, Arbeitslosigkeit - Auswirkungen, Westdeutschland, Bundesrepublik Deutschland

An Empirical Test of Reder Competition and Specific Human Capital Against Standard Wage Competition

A firm that faces insufficient supply of labor can either increase the wage offer to attract more applicants, or reduce the hiring standard to enlarge the pool of potential employees, or do both. This simultaneous adjustment of wages and hiring standards has been emphasized in a classical contribution by Reder (1955) and implies that wage reactions to employment changes can be expected to be more pronounced for low wage workers than for high wage workers. We test this hypothesis (together with a related hypothesis on firm-specific human capital) by applying a bootstrap-based quantile regression approach to censored panel data from the German employment register. Our findings suggest that market clearing is achieved by a combination of wage and hiring standards adjustment

An Empirical Test of the Reder Hypothesis

A firm that faces insufficient supply of labor can either increase the wage offer to attract more applicants, or reduce the hiring standard to enlarge the pool of potential employees, or do both. This simultaneous adjustment of wages and hiring standards in response to changes in market conditions has been emphasized in a classical contribution by Reder and leads to the effect that wage reactions to employment changes can be expected to be more pronounced for low wage workers than for high wage workers. This is the `Reder Hypothesis'. The present contribution sets out to test this hypothesis using German employment register data and a censored panel quantile regression approach. Our findings support the Reder Hypothesis, suggesting that market clearing in labor markets is achieved by a combination of wage adjustments and changes in hiring standards.standards; overqualification; wage structure; panel quantile regression; censoring

An Empirical Test of the Reder Hypothesis

A firm that faces insufficient supply of labor can either increase the wage offer to attract more applicants, or reduce the hiring standard to enlarge the pool of potential employees, or do both. This simultaneous adjustment of wages and hiring standards in response to changes in market conditions has been emphasized in a classical contribution by Reder and leads to the effect that wage reactions to employment changes can be expected to be more pronounced for low wage workers than for high wage workers. This is the `Reder Hypothesis'. The present contribution sets out to test this hypothesis using German employment register data and a censored panel quantile regression approach. Our findings support the Reder Hypothesis, suggesting that market clearing in labor markets is achieved by a combination of wage adjustments and changes in hiring standards

The returns to job mobility and inter-regional migration

"This paper analyses extensively the effects of inter-regional mobility on the earnings of skilled workers. We interact returns to inter-regional migration with employer changes to separate the two effects and find that inter-regional mobility results in positive additional returns as compared to job mobility within a region in general. Partitioning the sample by experience level and tracing the exact paths of migration, it turns out that both the contemporaneous returns and the wage-growth effects exhibit large differences: for young workers we find the highest contemporaneous returns and the largest wage growth effects. Further analyses show that these returns to migration are strongly influenced by the characteristics of both the region of origin and the region of destination. In contrast to results from economic theory, the returns to inter-regional migration are most significant for people who move to rural districts in agglomerated areas. Altogether, the results indicate that switching to a different workplace in a similar region type pays more than moving to a different type of region." (Author's abstract, IAB-Doku) ((en))Arbeitskräftemobilität, Binnenwanderung, zwischenbetriebliche Mobilität, regionale Mobilität, altersspezifische Faktoren, regionale Faktoren, Stadtregion, Ballungsraum, ländlicher Raum, Lohnentwicklung

Variance Estimation in a Random Coefficients Model

This papers describes an estimator for a standard state-space model with coefficients generated by a random walk that is statistically superior to the Kalman filter as applied to this particular class of models. Two closely related estimators for the variances are introduced: A maximum likelihood estimator and a moments estimator that builds on the idea that some moments are equalized to their expectations. These estimators perform quite similar in many cases. In some cases, however, the moments estimator is preferable both to the proposed likelihood estimator and the Kalman filter, as implemented in the program package Eviews

Variance Estimation in a Random Coefficients Model

This papers describes an estimator for a standard state-space model with coefficients generated by a random walk that is statistically superior to the Kalman filter as applied to this particular class of models. Two closely related estimators for the variances are introduced: A maximum likelihood estimator and a moments estimator that builds on the idea that some moments are equalized to their expectations. These estimators perform quite similar in many cases. In some cases, however, the moments estimator is preferable both to the proposed likelihood estimator and the Kalman filter, as implemented in the program package Eviews.time-varying coefficients; adaptive estimation; random walk; Kalman filter; state-space model

Revisiting the German wage structure

This paper shows that wage inequality in West Germany has increased over the past three decades, contrary to common perceptions. During the 1980s, the increase was concentrated at the top of the distribution; in the 1990s, it occurred at the bottom end as well. Our findings are consistent with the view that both in Germany and in the United States, technological change is responsible for the widening of the wage distribution at the top. At the bottom of the wage distribution, the increase in inequality is better explained by episodic events, such as supply shocks and changes in labor market institutions. These events happened a decade later in Germany than in the United States