Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279669 
Year of Publication: 
2023
Series/Report no.: 
IWH Discussion Papers No. 20/2022
Version Description: 
This version: 13.11.2023
Publisher: 
Halle Institute for Economic Research (IWH), Halle (Saale)
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.
Subjects: 
collective wage agreements
employer monopsony
employer wage premia
labour market power
wage mark-downs
wage mark-ups
worker monopoly
works councils
JEL: 
D22
J31
J42
J50
Document Type: 
Working Paper

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