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The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data

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  • Tobias Brändle
  • Laszlo Goerke

Abstract

A large number of articles have analysed ‘the one constant’ in the economic effects of trade unions, namely that collective bargaining reduces employment growth by 2–4% points per year. Evidence is, however, mostly related to Anglo‐Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked‐employer‐employee data for Germany, we find a negative correlation between being covered by a sector‐wide bargaining agreement or firm‐level contract and employment growth of about 1% point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross‐section data might be driven by selection.

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  • Tobias Brändle & Laszlo Goerke, 2018. "The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(5), pages 445-478, November.
  • Handle: RePEc:bla:scotjp:v:65:y:2018:i:5:p:445-478
    DOI: 10.1111/sjpe.12180
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    2. Brändle, Tobias, 2024. "Unions and Collective Bargaining: The Influence on Wages, Employment and Firm Survival," GLO Discussion Paper Series 1457, Global Labor Organization (GLO).
    3. Addison, John T. & Teixeira, Paulino & Grunau, Philipp & Bellmann, Lutz, 2019. "Dissonant Works Councils and Establishment Survivability," IZA Discussion Papers 12438, Institute of Labor Economics (IZA).
    4. Claudio Lucifora & Daria Vigani, 2021. "Losing Control? Unions’ Representativeness, Pirate Collective Agreements, and Wages," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(2), pages 188-218, April.
    5. Andrea Garnero & François Rycx & Isabelle Terraz, 2020. "Productivity and Wage Effects of Firm‐Level Collective Agreements: Evidence from Belgian Linked Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 58(4), pages 936-972, December.
    6. Bernardo Fanfani, 2019. "The Employment Effects of Collective Bargaining," Working papers 064, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    7. John T. Addison, 2016. "Collective bargaining systems and macroeconomic and microeconomic flexibility: the quest for appropriate institutional forms in advanced economies," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-53, December.
    8. Panu Poutvaara & Till Nikolka & Daniel Leithold & Katrin Oesingmann & Daniela Wech, 2017. "Comparative study about the powers and the representativeness of employee representatives in French and German enterprises," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 84, September.
    9. Mohrenweiser, Jens, 2022. "Works Councils," GLO Discussion Paper Series 1103, Global Labor Organization (GLO).
    10. Adrian Chadi & Laszlo Goerke, 2023. "Seeking shelter in times of crisis? unemployment, perceived job insecurity and trade union membership," Economica, London School of Economics and Political Science, vol. 90(359), pages 1041-1088, July.
    11. Brändle, Tobias & Kalweit, René, 2016. "The Employment Effects of the EU Eastern Enlargement in Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145502, Verein für Socialpolitik / German Economic Association.
    12. Fanfani, Bernardo, 2023. "The employment effects of collective wage bargaining," Journal of Public Economics, Elsevier, vol. 227(C).

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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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