Industrial relations and the wage differentials between skilled and unskilled blue collar workers within establishments: an empirical analysis with data of manufacturing firms
Increased wage inequality between skilled and unskilled workers is a stylized fact, which can be observed in many developed countries. Among the explanations advanced for this phenomenon is the increasing globalization, a skill-biased technical progress, restructuring of the firms, and last but not least, a decreasing importance of industrial relations institutions. In the paper, we investigate in a three-step procedure with firms’ data whether the latter determinant is influential. We control for the other relevant explanations and split industrial relations into three components - coverage of collective bargaining, existence of a works council, and union density - within a four-equation model. We find an insignificant influence of the union density. A Works council compresses the wage differentials between skilled and unskilled blue-collar workers while coverage is effective in the opposite direction. The latter two effects nearly offset each other.
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adjusted Bellmann beta coefficients Brunello business units collective agreements collective bargaining compressed council coverage covered by collective determinants differences Differentials between Skilled dummy variable East Germany Economic Empirical Analysis enterprise establishment level Evidence F-test firm size effects flexibility Germany globalization Hannover Panel Human Capital Immigrants impact of industrial increase indicators industrial relations institutions Industry dummy investigation IZA Discussion Papers Jirjahn labor economics Labor Market Lower Saxony lower wage Lucifora M. A. Shields multi-employer contracts percentage of female percentage of sales piece rates principal component analysis probit model productivity progress and restructuring R. A. Hart regression model regressors RESET sample Schnabel skill-biased technical progress skilled and unskilled skilled workers skilled-unskilled wage differential t-value Tarifbindung theoretical trade union density Training on-the-job financed Unemployment University of Hannover Unskilled Blue-Collar Workers unskilled workers wage dispersion wage distribution wage groups wage inequality wage level wage spread wage structure Workers within Establishments workplace structure