Recent studies have pointed to the association between declining
collective bargaining coverage and rising overall wage inequality. This
association holds more or less across-the-board, at least for broad swathes of
recent history. That said, the exact contribution of deununionization is a
matter of debate, perhaps no more so than in Germany, our case study. The
present paper takes a less conventional approach to this particular source of
rising inequality by examining intra-plant wage dispersion in the wake of
establishments either exiting from or entering into collective agreements.
Several measures of inequality are constructed for German establishments over
the twelve-year period 1996-2008, an interval of continuously declining union
representation. Using linked employer-employee data, our estimation strategy
hinges upon the identification of comparable groups of establishments and on
both instantaneous and medium- to long-term changes in the wage structure. A modest widening effect on dispersion of
exiting from a sectoral agreement is detected in the data once we effect a
comparison across observationally-equivalent individuals. The converse does not
apply in respect of joiners. The scale of the former effect casts doubt on some
of the more exaggerated claims of the importance of deunionization to wage
inequality and the resurgence of Germany more generally.
JEL Classification: J31,
collective bargaining, deunionization, intra-plant wage inequality, sectoral
agreement exits and accessions.