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Firm-level pay agreements and within-firm wage inequalities: Evidence across Europe

Author

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  • Valeria Cirillo
  • Matteo Sostero
  • Federico Tamagni

Abstract

This article investigates the relation linking single-employer bargaining and within-firm wage dispersion -- a significant driver of overall wage inequality. The study considers six European economies (Belgium, Spain, Germany, France, the Czech Republic and the UK), featuring different collective bargaining institutions, in 2006 and 2010. We examine two different measures of within-firm inequality, allowing to capture how different groups of employees (top vs. bottom paid, and managers vs. low-layer employees) may differently benefit or lose from firm-level bargaining. Our findings show that firm-level bargaining has heterogeneous effects across countries, over time and by inequality measures. We interpret our evidence as supporting that country-specificities and the heterogeneous balance of power within organizations represent key elements to understand the role of the bargaining system in shaping inequalities.

Suggested Citation

  • Valeria Cirillo & Matteo Sostero & Federico Tamagni, 2019. "Firm-level pay agreements and within-firm wage inequalities: Evidence across Europe," LEM Papers Series 2019/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2019/12
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    File URL: http://www.lem.sssup.it/WPLem/files/2019-12.pdf
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    References listed on IDEAS

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    3. Elin Svarstad & Ragnar Nymoen, 2023. "Wage inequality and union membership at the establishment level: An econometric study using Norwegian data," Oxford Economic Papers, Oxford University Press, vol. 75(2), pages 371-392.

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    Keywords

    within-firm wage inequalities; occupational wage-gap; firm-level bargaining; matched employer-employee data;
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