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Local wages and sectoral wage bargaining in Germany

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  • Büttner, Thiess

Abstract

The peculiarities of the German system of labor relations suggest, that the efficiency wage hypothesis stating an inverse relation between local wages and local unemployment should be related to sectoral wage bargaining on the national level. For that purpose a theoretical model is presented which relates firm specific wages with wage negotiations on a supra-firm level. It is shown that there exists a reasonable bargaining scheme which supports an aggregate wage gap. The model shows a particular nonlinearity of the wage curve, which suggests that there is no influence of unemployment in low wage / high unemployment regions. In the empirical section a wage curve estimation using aggregate data is presented. Although the combined explanation with efficiency and negotiated wages cannot be tested directly, some supporting results are found.

Suggested Citation

  • Büttner, Thiess, 1995. "Local wages and sectoral wage bargaining in Germany," Discussion Papers 30, University of Konstanz, Center for International Labor Economics (CILE).
    • Handle: RePEc:zbw:koncil:30
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    1. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, April.
    2. Burda, Michael C & Mertens, Antje, 1994. "Locational Competition versus Cooperation in Labour Markets: An Implicit Contract Reinterpretation," CEPR Discussion Papers 1020, C.E.P.R. Discussion Papers.
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