Organised labour, labour market imperfections, and employer wage premia

Sabien Dobbelaere, Boris Hirsch, Steffen Müller and Georg Neuschäffer
Authors registered in the RePEc Author Service: Steffen Mueller

No 20/2022, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: This paper examines how collective bargaining through unions and workplace co-determination through works councils relate to labour market imperfections and how labour market imperfections relate to employer wage premia. Based on representative German plant data for the years 1999-2016, we document that 70% of employers pay wages below the marginal revenue product of labour and 30% pay wages above. We further find that the prevalence of wage mark-downs is signifi cantly smaller when organised labour is present and that the ratio of wages to the marginal revenue product of labour is significantly bigger. Finally, we document a close link between labour market imperfections and mean employer wage premia, that is wage differences between employers corrected for worker sorting.

Keywords: collective wage agreements; employer monopsony; employer wage premia; labour market power; wage mark-downs; wage mark-ups; worker monopoly; works councils (search for similar items in EconPapers)
JEL-codes: D22 J31 J42 J50 (search for similar items in EconPapers)
Date: 2023, Revised 2023
New Economics Papers: this item is included in nep-com, nep-eur and nep-lma
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https://www.econstor.eu/bitstream/10419/279669/1/iwh-dp2022-20rev.pdf (application/pdf)

Related works:
Working Paper: Organised Labour, Labour Market Imperfections, and Employer Wage Premia (2020)
Working Paper: Organised Labour, Labour Market Imperfections, and Employer Wage Premia (2020)
Working Paper: Organised Labour, Labour Market Imperfections, and Employer Wage Premia (2020)
Working Paper: Organised Labour, Labour Market Imperfections, and Employer Wage Premia (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:202022

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