Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33503
Authors: 
Bonin, Holger
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1871
Abstract: 
The paper explores wage setting practice in East Germany since unification. It gathers evidence for the claim that economically non-viable collective agreements have fostered decentralized wage setting. First, we document declining organization rates of both employers and employees, allowing drift between collective and actual wages. Second, we examine macroeconomic wage flexibility by estimating a switching regime model, in which the observed distribution of individual wage changes is generated by simultaneous processes of union, nominal or no wage rigidity. The results indicate that wages become more flexible during transition. Furthermore nominal wage rigidity, typical for decentralized bargaining, is much more common in East than in West Germany, while the opposite holds regarding union wage rigidity.
Subjects: 
wage rigidity
unions
East Germany
JEL: 
J31
J51
P52
Document Type: 
Working Paper

Files in This Item:
File
Size
228.18 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.