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Industry‐Level Wage Bargaining: A Partial Rehabilitation—The German Experience

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  • Bernd Fitzenberger
  • Wolfgang Franz

Abstract

In order to reduce unemployment, it is often recommended that industry‐level wage bargaining in Germany should be replaced by a more decentralized system. This paper provides a critical assessment of the current wage bargaining institutions and re‐examines the case for a more decentralized system. Based on a theoretical model integrating Insider–Outsider aspects into the comparison, the uniformly superior employment performance of a decentralized wage bargaining system is questioned. We conclude that, rather than solely trying to decentralize wage bargaining, a promising policy option may be to improve the skills of the unemployed by efficient labour market policies and to foster institutional reforms such that wage bargaining takes account of the long‐run employment consequences of wage setting.

Suggested Citation

  • Bernd Fitzenberger & Wolfgang Franz, 1999. "Industry‐Level Wage Bargaining: A Partial Rehabilitation—The German Experience," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(4), pages 437-457, September.
    • Handle: RePEc:bla:scotjp:v:46:y:1999:i:4:p:437-457
    DOI: 10.1111/1467-9485.00142
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    Cited by:

    1. Nicole Gürtzgen, 2003. "Revisiting the Impact of Union Structures on Wages: Integrating Different Dimensions of Centralization," LABOUR, CEIS, vol. 17(4), pages 519-542, December.
    2. Uwe Jirjahn & Kornelius Kraft, 2010. "Teamwork And Intra‐Firm Wage Dispersion Among Blue‐Collar Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 404-429, September.
    3. Addison, John T. & Teixeira, Paulino & Evers, Katalin & Bellmann, Lutz, 2015. "Pacts for Employment and Competitiveness as a Role Model? Their Effects on Firm Performance," IZA Discussion Papers 9323, Institute of Labor Economics (IZA).
    4. Olaf Hübler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, September.

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