Organized Labor, Labor Market Imperfections, and Employer Wage Premia
Sabien Dobbelaere, Boris Hirsch, Steffen Müller, Georg Neuschäffer
ILR Review,
Nr. 3,
2024
Abstract
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.
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IWH-Insolvenzforschung
IWH-Insolvenzforschung Die IWH-Insolvenzforschungsstelle bündelt die...
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Department Profiles
Research Profiles of the IWH Departments All doctoral students are allocated to one...
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Professor in Finance and Labor in conjunction with a position as Senior Research Advisor at the Department of Laws, Regulations and Factor Market
Vacancy Professor in Finance and Labor in conjunction with a...
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Department Profiles
Research Profiles of the IWH Departments All doctoral students are allocated to one...
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Brown Bag Seminar
Brown Bag Seminar Financial Markets Department In der Seminarreihe "Brown...
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Speed Projects
Speed Projects Hier finden Sie die IWH EXplore Speed Projects chronologisch...
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Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data
Andres Drenik, Simon Jäger, Pascuel Plotkin, Benjamin Schoefer
Review of Economics and Statistics,
Nr. 1,
2023
Abstract
We estimate how much firms differentiate pay premia between regular and outsourced workers in temp agency work arrangements. We leverage unique Argentinian administrative data that feature links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We estimate that a high-wage user firm that pays a regular worker a 10% premium pays a temp worker on average only a 4.9% premium, compared to what these workers would earn in a low-wage user firm in their respective work arrangements—the midpoint between the benchmarks for insiders (one) and the competitive spot-labor market (zero).
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Uncovered Workers in Plants Covered by Collective Bargaining: Who Are They and How Do They Fare?
Boris Hirsch, Philipp Lentge, Claus Schnabel
British Journal of Industrial Relations,
Nr. 4,
2022
Abstract
Abstract In Germany, employers used to pay union members and non-members in a plant the same union wage in order to prevent workers from joining unions. Using recent administrative data, we investigate which workers in firms covered by collective bargaining agreements still individually benefit from these union agreements, which workers are not covered anymore and what this means for their wages. We show that about 9 per cent of workers in plants with collective agreements do not enjoy individual coverage (and thus the union wage) anymore. Econometric analyses with unconditional quantile regressions and firm-fixed-effects estimations demonstrate that not being individually covered by a collective agreement has serious wage implications for most workers. Low-wage non-union workers and those at low hierarchy levels particularly suffer since employers abstain from extending union wages to them in order to pay lower wages. This jeopardizes unions' goal of protecting all disadvantaged workers.
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Trading away Incentives
Stefano Colonnello, Giuliano Curatola, Shuo Xia
IWH Discussion Papers,
Nr. 23,
2022
Abstract
Equity pay has been the primary component of managerial compensation packages at US public firms since the early 1990s. Using a comprehensive sample of top executives from 1992-2020, we estimate to what extent they trade firm equity held in their portfolios to neutralize increments in ownership due to annual equity pay. Executives accommodate ownership increases linked to options awards. Conversely, increases in stock holdings linked to option exercises and restricted stock grants are largely neutralized through comparable sales of unrestricted shares. Variation in stock trading responses across executives hardly appears to respond to diversification motives. From a theoretical standpoint, these results challenge (i) the common, generally implicit assumption that managers cannot undo their incentive packages, (ii) the standard modeling practice of treating different equity pay items homogeneously, and (iii) the often taken for granted crucial role of diversification motives in managers’ portfolio choices.
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