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The one constant: a causal effect of collective bargaining on employment growth? Evidence from German linked‐employer‐employee data

Year: 2018

Type: article

Abstract: A large number of articles have analysed ‘the one constant’ in the economic effects of trade unions, namely that collective bargaining reduces employment growth by 2–4% points per year. Evidence is, however, mostly related to Anglo‐Saxon countries. We investigate whether a different institutional setting might lead to a different outcome, making the constant a variable entity. Using linked‐employer‐employee data for Germany, we find a negative correlation between being covered by a sector‐wide bargaining agreement or firm‐level contract and employment growth of about 1% point per annum. However, the correlation between employment growth and collective bargaining is not robust to the use of panel methods. We conclude that the results of the literature using cross‐section data might be driven by selection.

Source: Scottish Journal of Political Economy

DOI: 10.1111/sjpe.12180

Authors: Tobias Brändle, Laszlo Goerke

Institutions: Institute for Applied Economic Research, University of Tübingen, IZA - Institute of Labor Economics, Institute for Labour Law and Industrial Relations in the European Union, Universität Trier

Language: English

Topic: Labor Movements and Unions

Subfield: Public Administration

Field: Social Sciences

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funder: Universität Paderborn