Organized labor, labor market imperfections, and employer wage premia
Research output: Journal contributions › Journal articles › Research › peer-review
Standard
Organized labor, labor market imperfections, and employer wage premia. / Dobbelaere, Sabien; Hirsch, Boris; Müller, Steffen et al.
In: Industrial and Labor Relations Review, Vol. 77, No. 3, 05.2024, p. 396-427.Research output: Journal contributions › Journal articles › Research › peer-review
Harvard
APA
Vancouver
Bibtex
}
RIS
TY - JOUR
T1 - Organized labor, labor market imperfections, and employer wage premia
AU - Dobbelaere, Sabien
AU - Hirsch, Boris
AU - Müller, Steffen
AU - Neuschäffer, Georg
N1 - Funding Information: We thank Laszlo Goerke, Fabian Lange, and Todd Sorensen for very useful suggestions. We further appreciate comments by participants of the EALE/SOLE/AASLE 2020, the EEA 2020, the Verein für Socialpolitik 2020, the RES 2021, and the IAAE 2022 conferences, of the 21st IZA/SOLE 2022 Transatlantic meeting and the IAB 2023 workshop on “Imperfect Competition in the Labor Market,” and of presentations in Amsterdam, Basel, Halle, and Lüneburg. We also gratefully acknowledge financial support from the Deutsche Forschungsgemeinschaft under the grant title “Firm Wage Differentials in Imperfect Labour Markets: The Role of Market Power and Industrial Relations in Rent Splitting between Workers and Firms.” Publisher Copyright: © The Author(s) 2024.
PY - 2024/5
Y1 - 2024/5
N2 - This article examines how collective bargaining through unions and workplace codetermination through works councils relate to labor market imperfections and how labor market imperfections relate to employer wage premia. Based on representative German plant data for the years 1999–2016, the authors document that 70% of employers pay wages below the marginal revenue product of labor and 30% pay wages above that level. Findings further show that the prevalence of wage markdowns is significantly smaller when organized labor is present, and that the ratio of wages to the marginal revenue product of labor is significantly larger. Finally, the authors document a close link between labor market imperfections and mean employer wage premia, that is, wage differences between employers corrected for worker sorting.
AB - This article examines how collective bargaining through unions and workplace codetermination through works councils relate to labor market imperfections and how labor market imperfections relate to employer wage premia. Based on representative German plant data for the years 1999–2016, the authors document that 70% of employers pay wages below the marginal revenue product of labor and 30% pay wages above that level. Findings further show that the prevalence of wage markdowns is significantly smaller when organized labor is present, and that the ratio of wages to the marginal revenue product of labor is significantly larger. Finally, the authors document a close link between labor market imperfections and mean employer wage premia, that is, wage differences between employers corrected for worker sorting.
KW - Economics
KW - collective wage agreements
KW - employer monopsony
KW - employer wage premia
KW - labor market power
KW - wage markdowns
KW - wage markups
KW - worker monopoly
KW - works councils
UR - http://www.scopus.com/inward/record.url?scp=85188547703&partnerID=8YFLogxK
U2 - 10.1177/00197939241237757
DO - 10.1177/00197939241237757
M3 - Journal articles
VL - 77
SP - 396
EP - 427
JO - Industrial and Labor Relations Review
JF - Industrial and Labor Relations Review
SN - 0019-7939
IS - 3
ER -