Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation

This study exploits longitudinal employer–employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross‐sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.     

Collective Bargaining and Within-firm Wage Dispersion in Spain

This paper analyses the effect of collective bargaining on within‐firm wage dispersion for the case of Spain. What is relevant in the Spanish case is to compare the effect of the two basic levels of bargaining (firm and sector) on wage dispersion. By using the Oaxaca–Blinder decomposition, this paper concludes that collective agreements at firm level have a negative effect on wage dispersion. At the same time, firms that have signed these types of agreements show greater wage dispersion than those covered by agreements at the sector level, owing to the positive and compensating effect of firms’ and workers’ features.     

Bargained Equality: The Strengths and Weaknesses of Workplace Gender Equality Agreements and Plans in France

‘Bargained equality’ reflects wider characteristics of French employment relations whereby state‐driven collective bargaining is a major mode of regulation but is based on weak workplace bargaining cultures outside the largest firms. This article focuses on duties on French employers to bargain on gender equality. It presents findings of a project evaluating workplace agreements and plans on gender equality, based on a sample of 186 agreements submitted in 2014–2015, in 10 sectors, and in‐depth interviews in 20 companies. Despite a rise in formal compliance due to stronger enforcement since 2012, our analysis shows that most companies submitting plans or agreements do not systematically address quantitative measurement of pay or other gender gaps. As well as sectoral differences, the analysis also identifies ‘generational effects’: processes of change which occur as collective agreements expire and are replaced are dependent on local dynamics of bargaining. Based on this analysis, we argue that attention should be paid to the resources available to local bargaining actors, in order to promote an equality agenda.     

The Flip Side of Organized Decentralization: Company‐Level Bargaining in Denmark

The Danish collective bargaining system is often considered a good example of organized decentralization. It has been characterized as a centralized decentralization suggesting a reproduction of sector‐level bargaining relations at company level. A recent survey on company‐level bargaining in the Danish industrial sector confirms this hypothesis with regard to the experiences of local managers and shop stewards. However, part of the survey also questions whether the reproduction will continue in the future. Small‐ and medium‐sized enterprises and their employees tend to miss out on the mutual benefits obtained through company‐level agreements. Furthermore, shop stewards often find it difficult to gain employee support during negotiations, which jeopardizes their bargaining relations with management.     

Decentralized Wage Formation in Sweden

Recent Swedish collective bargaining agreements have incorporated provisions for local pay review talks and opportunities for individuals to negotiate their own wages. Using trade union data, we show that members who participate in local pay review talks and members who negotiate their own wages have significantly higher monthly wages than those who do not. Pay decentralization either improves an individual's bargaining position or attracts more productive trade union members. Either way, trade union wage policies to increase individual‐level wage variance are achieving their intended effects.     

Wage Cyclicality Under Different Regimes of Industrial Relations

We analyze the effect of collective wage agreements and of works councils on the cyclicality of real wages. Using employer–employee data for western Germany (1995–2004), we find that wage adjustments to positive and negative shocks are generally not symmetric. Wage growth increases in all industrial relations regimes when unemployment is falling, but this inverse relationship is weaker when unemployment is rising. Moreover, in plants with individual‐level bargaining, wages do not adjust at all to rising unemployment. Works councils increase wage growth only in firms covered by sectoral agreements, but they do not affect the cyclicality of wages.     

Valuing Stakeholder Governance: Property Rights,Community Mobilization,and Firm Value

Research summary : While research has shown that good stakeholder relations increase the value of a firm, less is known about how specific types of stakeholder governance affect firm value. We examine the value of one such governance mechanism—community benefits agreements (CBAs) signed by firms and local communities—intended to minimize social conflict that disrupts access to valuable resources. We argue that shareholders evaluate more positively CBAs with local communities with strong property rights and histories of institutional action and extra‐institutional mobilization because these communities are more likely to cause costly disruptions and delays for a firm. We evaluate these arguments by analyzing the cumulative abnormal returns associated with the unexpected announcement of 148 CBAs signed between mining companies and local indigenous communities in Canada. Managerial summary : With firms across many industries facing escalating costs associated with social conflict, new tools are emerging to help firms mitigate these risks by seeking the support of the local communities in which they operate. Community benefits agreements (CBAs) are contracts in which a community provides consent for a new investment in return for tangible benefits, such as local hiring and revenue sharing. We argue that although CBAs are costly for the firm, they are particularly valuable when communities can cause costly disruptions and delays for a firm. Our study of investor reactions to the announcement of 148 CBAs signed between mining companies and local indigenous communities in Canada shows that investors value more CBAs signed with communities with strong property rights and histories of protest. Copyright © 2017 John Wiley & Sons, Ltd.     

Long‐Term Earnings Inequality,Earnings Instability and Temporary Employment in Spain: 1993–2000

This article provides a longitudinal perspective on changes in Spanish male earnings inequality for the period 1993–2000 by decomposing the earnings covariance structure into its permanent and transitory parts. Cross‐sectional earnings inequality of male full‐time employees falls over the second half of the 1990s. Such decline was determined by a decrease in earnings instability and an increase of the permanent earnings component. Given the marked decline in temporary employment over the sample period, we also examine the effect of the type of contract on earnings variance components and find that workers on a fixed‐term contract face, on average, more instability than workers on a permanent contract. This evidence suggests that the decline in temporary employment is responsible for the decreasing earnings instability.     

Unionization,Inequality and Redistribution

This article explores the implications of the OECD‐wide decline of union density for earnings inequality and income redistribution by looking at aggregate (country‐level) data. Over the period 1975–95, countries that experienced relatively large declines in union density also experienced relatively large increases in earnings inequality. In addition, governments apparently became less willing to engage in ‘compensatory redistribution’ in these countries. Since the early 1990s, however, union decline has become less closely associated with rising earnings inequality and redistributive policy changes. I argue that the declining relevance of unionization has to do with changes in the position of union members in the income distribution. In most OECD countries, the average union member has become relatively better off as union density has declined and union members have probably become less supportive of wage solidarity and redistributive government policies.     

Collective Wage Contracts,Opt‐Out Clauses,and Firm Wage Differentials: Evidence from Linked Employer–Employee Data

Using a large linked employer–employee data set, this article studies whether the existence and use of flexibility provisions within centralized collective wage agreements alter the structure of pay across employers. Using level regressions and first‐difference methods, we find that—compared with contracts without any flexibility—wages under opt‐out clauses are more responsive to local profitability conditions in below‐average‐performing establishments. In contrast, the sensitivity of wages to local profitability is smaller in high‐performance establishments. Our results provide further evidence for a threat potential of the existence of opt‐out clauses whose impact on flexibility is larger than the real application.     

International Framework Agreements: A New Model for Securing Workers Rights?

A rapidly growing number of international unions are signing international framework agreements with multinational enterprises (MNEs), securing their commitment to respect fundamental workers' rights. This article explores the agreement between the global banana giant Chiquita and the Latin-American Coordination of Banana Workers Unions (COLSIBA) signed in 2001. The study shows how the banana unions employed innovative tactics of regional coordination and of alliances with nongovernmental organizations in the major consumer markets. Fieldwork on the implementation of the agreement further reveals an overall poor use of the agreement potential but also how the agreement was used as leverage for local organizing activities. This article argues that such international agreements show a promising way to defend and advance workers rights within MNEs, creating space for union organizing, collective bargaining, and social dialogue.     

The Erosion of the German System of Industrial Relations

The paper assesses current trajectories of change in the German system of industrial relations by analysing the co-determination and collective bargaining systems. It argues that two parallel developments undermine the institutional stability of the German model. First, the institutional base of the German industrial relations system, which has served as the pre-condition of its past success, has been shrinking during the last two decades. This is due to a decline in coverage by the two major industrial relations institutions: the works council system and wage agreements. Today fewer than 15 per cent of German plants are covered by both a valid collective agreement and a works council. Second, increasing decentralization pressures within collective bargaining tend to undermine the division of labour between co-determination and collective bargaining. The dynamics of an institutional erosion of the German industrial relations institutions and the decentralization of collective bargaining disturbs the fine-tuning of the mediating process between macroeconomic steering capacity and co-operative workplace industrial relations. This tendency has been aggravated by the effects of German unification. The current institutional developments of the German industrial relations system leave serious doubts about the future of a successful model of co-operative modernization.     

Rent‐Sharing under Different Bargaining Regimes: Evidence from Linked Employer–Employee Data

Using Belgian linked employer–employee data, we examine how collective bargaining arrangements affect the relationship between firms' profitability and individual wages via rent‐sharing. In industries where agreements are usually renegotiated at firm‐level (‘decentralized industries’) wages and firm‐level profits are positively correlated regardless of the type of collective wage agreement by which the workers are covered (industry or firm). On the other hand, where firm‐level wage renegotiation is less common (‘centralized industries’), wages are only significantly related to firms' profitability for workers covered by a firm‐level collective agreement. Thus, industry‐wide contracts that are not complemented by a firm‐level collective agreement suppress the impact of firm profits on workers' wages in centralized industries.     

Dissecting Between-Plant and Within-Plant Wage Dispersion: Evidence from Germany

Using rich linked employer–employee data for (West) Germany between 1996 and 2014, we conduct a decomposition analysis based on recentered influence function (RIF) regressions to analyze the relative contributions of various plant and worker characteristics to the rise in German wage dispersion. Moreover, we separately investigate the sources of between-plant and within-plant wage dispersion. We find that industry effects and the collective bargaining regime contribute the most to rising wage inequality. In the case of collective bargaining, both the decline in collective bargaining coverage and the increase in wage dispersion among the group of covered plants have played important roles.     

We Want Them All Covered! Collective Bargaining and Firm Heterogeneity: Theory and Evidence from Germany

This article establishes a link between the degree of productivity dispersion within an industry and collective bargaining coverage of the firms in the industry. In a stylized unionized oligopoly model, we show that differences in productivity levels can affect the design of collective wage contracts a sector‐union offers to heterogeneous firms. Using German linked employer–employee data, we test a range of our theoretical hypotheses and find empirical support for them. The dispersion of sector‐level labour productivity decreases the likelihood of firms being covered by a collective bargaining agreement on the industry level, but increases the likelihood of firms being covered by firm‐level agreements. The results hold for different subsamples and (panel) estimation techniques.     

The Rise in Orientation at Collective Bargaining Without a Formal Contract

While firm participation in collective bargaining between unions and employers’ associations has been decreasing in Germany over the last two decades, orientation at collectively bargained wages has increased in popularity. Orientation implies that employers claim to set wages according to collective agreements but they are not formally bound by the respective bargaining contract, and in fact, I observe that they pay significantly lower wages than firms that are formally covered. Dynamic nonlinear panel estimation applied to establishment‐level data shows that this orientation is a stepping stone into formal participation. However, the decline in formal participation and the opposing rise in orientation are mostly due to a changing establishment composition rather than to behavioral transitions.     

False Self‐Employment,Autonomy and Regulating for Decent Work: Improving Working Conditions in the UK Stripping Industry

A large‐scale study of working conditions in UK‐based strip dancing clubs reveals that dancers are against de facto self‐employment as it is defined and practised by management, but in favour of de jure self‐employment that ensures sufficient levels of autonomy and control in the workplace. While dancers could potentially seek ‘worker’ or ‘employee’ status within the existing legal framework, their strong identification with the label ‘self‐employed’ and their desire for autonomy will likely inhibit these labour rights claims. We propose an alternative avenue for improving dancers’ working conditions, whereby self‐employed dancers articulate their grievances as a demand for decent work, pursued through licensing agreements between clubs and local authorities and facilitated by collective organization.     

What Can Explain the Increase in Earnings Inequality Among Males?

Increases in the inequality of earnings among male workers since the late sixties have been attributed primarily to shifts in employment from goods-producing to service-producing activities and the baby-boom cohort's entry into the labor market. This paper provides empirical estimates of the magnitude of these and other potential causes of the increase in earnings inequality from 1967 to 1985. The results show that changes related to the age composition of the labor force and to the industrial composition of the labor force account for only a portion of the increase in inequality. Most of the increase in unexplained by either factor. Other contributing factors include a rise in the return to education, a change in the relationship between age and education among males, and a decline in the marriage rate among younger males.     

R&D investment dynamics in agglomerations under weak appropriability regimes: Evidence from Indian R&D labs

What are the dynamics of R&D investment when firms agglomerate in environments with weak intellectual property rights protection? Specifically, do foreign and domestic firms present equal opportunities for free riding by domestic firms in such environments? We examine the impact on local firms' R&D investment from knowledge spillovers originating from co‐located foreign and domestic firms within and across industries. Building on fieldwork in India, we predict free riding by local firms on nearby foreign and local firms. Furthermore, we expect local firms to free ride more from other local firms within their industry and from foreign firms across industries. Analyzing a sample of 3,475 R&D lab investment decisions during 2003–2010 in India, we find that local firms free ride from other local firms both within and across industries. Copyright © 2014 John Wiley & Sons, Ltd.     

Organizational structure,context, customer orientation,and performance: lessons from Chinese state‐owned enterprises

This study develops a model grounded in the contingency theory (i.e., context–structure–performance) applicable to Chinese state‐owned enterprises (SOEs). Using data from a sample of 205 industrial SOEs, the study shows that SOE growth performance relative to the industry is positively predicted by formal control, inversely predicted by decentralization, and positively predicted by the interaction of the two. Customer product knowledge utilization, unrelated to growth performance relative to the industry, is positively predicted by formal control and the interaction of formal control with decentralization. Foreign induced industry competitiveness, technological turbulence, size, and production technology routineness are treated as context variables and modeled accordingly. Copyright © 2003 John Wiley & Sons, Ltd.